Eurozone economy contracted 0.1% in Q3

(BRUSSELS) - The eurozone economy shrank 0.1 percent in the third quarter, Eurostat said Thursday, confirming its original estimate that showed the 17-nation currency bloc had fallen back into recession.

After output fell 0.2 percent in the second quarter, the eurozone met the standard definition of a recession being two consecutive quarters of contraction.

In the 27-member EU the economy grew 0.1 percent in the period from July through September, after contracting 0.2 percent in the second quarter.

Compared with a year earlier, Eurostat said the eurozone economy shrank 0.6 percent in the third quarter while the EU 27 was down 0.4 percent, after falls of 0.5 percent and 0.3 percent respectively in the second quarter.

The EU's largest economy Germany, and France, both grew 0.2 percent in the third quarter while Spain contracted 0.3 percent and Italy dropped 0.1 percent.

Non-euro Britain posted a sharp gain of 1.0 percent, boosted by the London Olympic Games.

Howard Archer of IHS Global Insight said the data only confirmed that the eurozone was doing badly, as reflected in record unemployment of 11.7 percent.

The outcome would have been worse but for a strong export performance as weaker southern member states offset the positive data for France and Germany and even they could be at risk, Archer said.

"Latest data and survey evidence remain generally weak and the odds currently strongly favour the eurozone suffering further ... contraction in the fourth quarter of 2012," he said.

"Significantly, Germany looks to be in severe danger of contracting in the fourth quarter, as does France," he added.

For 2013, when IHS expects the eurozone economy to shrink 0.2 percent, Archer warned of "tightening fiscal policy in many countries, high and rising unemployment, limited consumer purchasing power and likely recurrent eurozone sovereign debt tensions."

GDP down by 0.1% in the euro area and up by 0.1% in the EU27 [Eurostat]