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The economies of the 16 countries that make up the eurozone declined by 2.5% in
the first three months of 2009, the EU's statistics agency Eurostat said.
Analysts had forecast a drop of only 2%. A sharp fall in German exports was a
key factor in the decline.
The German economy suffered its largest contraction since reunification,
falling 3.8% in the first quarter.
Eurostat also said that consumer price inflation in the eurozone remained
steady at 0.6% in April.
GDP in the eurozone fell 4.6% on a year-on-year basis.
GDP measures the value of all goods and services produced in a country.
GDP also fell 2.5% in the wider EU. About 60% of the UK's exports go to the 27
countries in the EU.
'Uncertainty shock'
The record decline in German GDP was led by falls in exports and investments,
the Statistics Office said.
Year-on-year the German economy shrank by 6.7%.
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the
Netherlands, Portugal, Slovakia, Slovenia and Spain
Bulgaria, the Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania,
Poland, Romania, Sweden and the UK
The German government has predicted the economy will shrink 6% in 2009.
That is a more downbeat forecast than the European Commission's.
The Commission expects Germany, Europe's biggest economy, to contract 5.4% this
year. It predicts a contraction of 4% across the eurozone.
The severity of the contraction surprised economists.
"The figures came in a bit worse than even we had expected and are
significantly worse than the consensus," said Joerg Kraemer from Commerzbank.
"In the first quarter, the German economy fell victim to the 'uncertainty
shock', which has gripped the world economy since the collapse of Lehman
Brothers."
The fourth quarter of 2008 had previously been the worst on record, with GDP
falling by a revised 2.2%.
Shrinking economies
Also on Friday, provisional data showed the French economy contracted 1.2% in
the first quarter, in line with forecasts.
The fall in French GDP, reported by the statistics office Insee, was smaller
than the 1.5% drop seen in the previous quarter.
In a statement, the Economy Ministry said it expected the French economy to
contract by 3% in 2009.
Meanwhile Italy's GDP declined 2.4% in the first quarter - the largest fall
since records began in 1980, statistics agency ISTAT said.
On Thursday, the National Statistics Institute in Spain said the Spanish
economy suffered its largest contraction in 50 years. GDP fell 1.8% in the
first quarter.
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