Eurozone economy slips into recession

Germany and Italy dragged the 15-nation euro zone into recession in the third-quarter, as the worst global financial crisis took a heavy toll on continental Europe. Gross Domestic Product (GDP) contracted by 0.2% in the July-September quarter from the previous quarter, after a 0.2% decline in the second quarter, according to the statistical agency Eurostat. A recession is commonly defined as two consecutive quarters of shrinking economic growth. Europe's third-quarter GDP expanded by 0.7% compared to the same period last year, the European Union's Luxembourg-based statistics office said.

The figures were in line with expectations. Economists had forecast a 0.1% quarterly decline and a 0.7% annual rise. The two quarters of contraction marked the first recession since the single currency was introduced almost a decade ago. With the US and Asian economies also struggling, leaders from the world's most advanced and emerging nations will meet in Washington to discuss ways of limiting the fallout from the financial meltdown and credit freeze.

The German economy, Europe's largest, contracted by a bigger-than-expected 0.5% in the third quarter. Joining it and Ireland is Italy, which slipped into its fourth recession in less than a decade, while Spain's economy contracted for the first time in 15 years. Growth in the Netherlands stagnated for a second straight quarter. Bucking the trend, French GDP unexpectedly expanded 0.1% from the second quarter, when it shrank 0.3%. Economists had forecast a contraction of 0.1%.