Eurozone economy slips back into recession

Germany, which has the largest economy in the eurozone, defied a broader slump. Its economy grew at an 0.2 percent pace during the third quarter.

Fabian Bimmer/Reuters

Germany, which has the largest economy in the eurozone, defied a broader slump. Its economy grew at an 0.2 percent pace during the third quarter.

FRANKFURT — The European economy shrank for a second quarter in a row, according to official data released Thursday, fulfilling a common definition of recession and signaling that the region still faces a long road to recovery.

Gross domestic product in the eurozone fell 0.1 percent in the three months through September compared to the previous quarter, according to Eurostat, the European Union statistics agency. The eurozone economy improved slightly from the second quarter, when it contracted by 0.2 percent. But it was the fourth quarter in a row of zero growth or worse.


Some analysts had forecast a bigger decline in output. But France grew more than analysts forecast, by 0.2 percent, because of better exports and higher consumer spending.

The Italian economy shrank by 0.2 percent, which was less than expected and a less severe decline than in previous quarters.

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Germany, which has the largest economy in the eurozone, continued to defy the crisis. The country grew 0.2 percent in the third quarter, slowing from a rate of 0.3 percent in the second quarter.

But data on exports, domestic demand, and business sentiment indicate that growth in Germany will slow in future quarters because of falling demand from its neighbors, economists said.

‘’The German economy is obviously suffering from the uncertainty arising from the sovereign debt crisis,’’ Jorg Kramer, chief economist at Commerzbank, said in a note to clients Thursday.


A recession is often defined as two quarters in a row of falling output, though many economists say it is important to take other data into account. But with unemployment in the euro area at 11.6 percent, and nearly 26 million people out of work, few would dispute that the region is in a deep downturn.

‘’Leading indicators suggest that the eurozone recession will broaden and deepen in the current fourth quarter,’’ said Martin van Vliet, an economist at ING Bank.

The EU, which includes the 17 countries in the eurozone plus 10 more countries primarily in eastern Europe, managed to return to growth in the quarter as several countries like Latvia and Lithuania recovered strongly. Growth for the EU as a whole was 0.1 percent compared to the previous quarter, after a decline of 0.2 percent.

But in Western Europe the decline spread to Austria and the Netherlands, which had been growing in previous quarters.

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