Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

Sarkozy criticised for comments about former justice minister's origins

Read more

INSIDE THE AMERICAS

Mexico kidnappings: Mother speaks out over missing daughter

Read more

DEBATE

The Pope's wake-up call: How to kickstart 'haggard' Europe (part 2)

Read more

DEBATE

The Pope's wake-up call: How to kickstart 'haggard' Europe

Read more

WEB NEWS

USA: African Americans call to boycott "Black Friday"

Read more

IN THE PAPERS

How not to argue over Thanksgiving dinner

Read more

IN THE PAPERS

Just how green is François Hollande?

Read more

BUSINESS DAILY

Oil prices ‘could fall further’ without OPEC output cut

Read more

ENCORE!

Film Show: 'Nobody From Nowhere', 'Asterix and Obelix' and 'In The Family'

Read more

Business

Euro zone hit by deepest GDP drop in its history

Latest update : 2009-03-05

The euro zone was hit in the last quarter of 2008 by its deepest economic contraction ever - 1.5% of GDP. The collapse of exports was the main culprit.

REUTERS - A collapse in exports, and plunging household demand and investment combined to produce the deepest ever quarterly economic contraction in the euro zone in the last three months of 2008, data showed on Thursday.

The European Union's statistics office confirmed its earlier estimate that quarter-on-quarter gross domestic product in the euro zone shrank 1.5 percent in October-December after a 0.2 percent drop the previous quarter.

Year-on-year, Eurostat said the contraction was 1.3 percent, deeper than the previously reported 1.2 percent.

The contraction is the deepest on record for the euro zone, which now has 16 members. The news comes as the European Central Bank meets on interest rates amid strong market expectations it will cut borrowing costs by 50 basis points to 1.5 percent.

The biggest negative contribution to the overall quarterly fall came from net trade, which took away 0.9 percentage point. Tumbling exports subtracted 3.1 percentage points while a hefty fall in imports added 2.2 percentage points.

Household demand took away another 0.5 percentage point and investment 0.6 point. Government spending subtracted 0.1 percentage point.

Apart from imports, the only positive contribution to growth came from inventories, which added 0.6 percentage point.

Eurostat said that over the whole of 2008, GDP grew by 0.8 percent in the euro area and by 0.9 percent in the European Union of 27 member states, against 2.6 percent growth in the euro zone in 2007 and 2.9 percent in the EU respectively.

In the United States, the economy expanded 1.1 percent last year and contracted by 0.7 percent in Japan.

The ECB will also publish on Thursday its new growth and inflation forecasts. Economists expect a sharp downward revision of its December prediction that euro zone growth will be in the range of -1.0-0.0 percent in 2009.

Date created : 2009-03-05

COMMENT(S)