国际英语新闻：Eurozone economy records worst contraction in Q4

BRUSSELS, March 5 (Xinhua) -- The eurozone economy contracted by 1.5 percent in the fourth quarter of 2008, compared with the previous three months, the European Union (EU)'s statistics bureau Eurostat said on Thursday, confirming a previous estimate.

    It was the deepest quarter-on-quarter contraction for the euro zone since the single currency club came into being in 1999, marking the third successive quarter of negative growth.

    In the second and third quarter of 2008, the combined economy of the 16 EU nations that use the euro shrank by 0.2 percent respectively and was officially plunged into recession for the first time in its history.

    Recession is usually defined as negative growth in two consecutive quarters.

    However, the substantially larger decline in the fourth quarter of 2008 showed the euro zone was deeper in recession as the financial crisis took its toll on the real economy.

    In the fourth quarter of last year, eurozone exports decreased by 7.3 percent from the previous three months, investments fell by2.7 percent and household final consumption expenditure declined by 0.9 percent.

    "The breakdown of the eurozone gross domestic product (GDP) shows very worrying extreme weakness across the board," said Howard Archer, chief European economist of IHS Global Insight.

    Eurozone exports plummeted because they were dragged down by sharply weakening global economic activity and the lagged impact of the persistently strong euro, he said.

    Consumer spending fell very sharply, indicating that rising unemployment and deepening concerns over the economic situation and jobs outweighed the benefit of retreating inflation. Meanwhile, investment plunged as businesses faced slumping demand, weakening capacity utilization, very tight credit conditions and deteriorating profitability.

    Almost all eurozone members saw their economy contract. Germany, the largest economy in the euro zone, shrank by 2.1 percent in the fourth quarter of 2008. France and Italy declined by 1.2 percent and 1.8 percent respectively.

    Year on year, the eurozone economy contracted by 1.3 percent in the last three months of 2008.

    "Worryingly, latest data and survey evidence for the Eurozone is largely dire across the board and point to ongoing substantial contraction," Archer said.

    Archer said he now expects the eurozone economy to contract by around 3 percent in 2009 as it is hit hard by global economic recession, extended tight credit conditions and financial sector problems, markedly rising unemployment and very weak business and consumer confidence.

    The European Commission forecast in January that the eurozone economy will contract by 1.9 percent this year, but Joaquin Almunia, EU Economic and Monetary Affairs commissioner, said on Tuesday that the European economy is facing bigger downside risks as the economic crisis deepened.

    In a bid to support the economy, the European Central Bank (ECB) on Thursday reduced its benchmark interest rate by the expected 50basis points from 2 percent to a record low of 1.5 percent.

    At a press conference accompanying Thursday's move, ECB President Jean-Claude Trichet indicated that the bank's governing council did not decide ex ante that this was the lowest level in interest rates and he did "not exclude" that they could go down further.

    Archer said he expected the ECB to cut interest rates by a further 50 basis points from 1.5 percent to 1 percent in April.

    The Bank of England also cut its interest rate on Thursday to 0.5 percent, the lowest level in the bank's 315-year history.

    Hard hit by the financial crisis, the British economy contracted by 1.5 percent in the last quarter of 2008 and was set to fall by 2.8 percent for the whole year of 2009.

    In the 27-nation EU, economy also shrank by 1.5 percent quarter on quarter in the last three months of 2008 and by 1.3 percent year on year.