Euro zone economy shrinks by 0.2%

Indicating that the region is yet to shrug off recession blues, economic activity in the 16-nation euro zone shrank 0.2 per cent in the second quarter of 2009, higher than projected earlier.

The GDP in the euro zone — 16 nations which share the common currency euro — was anticipated to contract just 0.1 per cent for the three months ended June.

Further, the European Union economy comprising 27 nations, shrank 0.3 per cent in the second quarter, again more than the earlier estimate of 0.2 per cent.

According to Eurostat, the official statistical agency of the European communities, in the second quarter, euro zone and EU GDP fell 0.2 per cent and 0.3 per cent, respectively.

Significant declines in investments and exports were the main factors for the GDP contraction.

"Investments fell by 1.5 per cent in the euro area and by 2.3 per cent in the EU. Exports fell by 1.5 per cent in the euro area and by 1.7 per cent in the EU," Eurostat said in a statement today.

In the first quarter of 2009, the euro zone GDP dropped 2.5 per cent, while that of EU fell by 2.4 per cent.

Interestingly, recovery hopes gained momentum after the region's two major economies — Germany and France — exited recession.

Europe has been severely hit by the ongoing financial meltdown, pushing many of the countries into deep economic slump.