The euro zone economy contracted in the first quarter of the year signalling a deepening economic crisis as the bloc entered its sixth quarter of consecutive decline.
According to official figures released by the EU's statistic agency Eurostat, gross domestic product (GDP) in the euro zone fell by 0.2 per cent, a slightly weaker performance than had been expected. This compared to a fall of 0.6 per cent in the final quarter of 2012 .
As in previous quarters, the economic contraction seen across the 27 EU states was less severe at -0.1 per cent, signalling the continuing difficulties besetting the 17 euro countries.
Previous quarter
France fell back into recession in the first quarter of the year, experiencing a 0.2 per cent contraction in GDP, in line with the previous quarter.
The data confirmed that Europe’s second largest economy has now entered recession for the second time in four years after clocking up two consecutive quarters of negative growth.
Economic activity in Germany was stagnant, with the country experiencing growth of 0.1 per cent during the first three months of the year, although some analysts said recent economic data suggests that Europe's largest economy may have rebounded in the second quarter. Germany's weaker-than-expected economic performance may have also reflected bad weather at the beginning of the year, analysts noted.
Spain and Italy saw their economies contract by 0.5 per cent in the first three months.
Data for Ireland is not yet available.
Responding to the figures, Ernst & Young said the small contraction in euro zone GDP at the beginning of the year was in line with what had been expected given the disappointing growth in world trade and continuing restructuring of domestic economies. "We think that GDP may fall again in quarter two, after which we would expect some stabilisation and low growth," said Ernst & Young economist Marie Diron.
The weak economic data may incentivise the ECB to stimulate the economy further at next month’s rate-setting meeting. This month it cut the benchmark interest rate to a record low of 0.5 per cent.
