The economy of the 16 countries that use the euro shrank by a massive 2.5 percent in the first quarter as the recession tightened its grip all across the continent. Key export engine Germany saw output swoon.Note that all Eurozone countries haven't yet reported data.
The euro zone has now seen output decline for four consecutive quarters. After modest 0.2 percent decreases in the second and third quarters of 2008, gross domestic product declined by 1.6 percent in the fourth quarter.
But the recession has deepened as global trade has dropped off sharply, with exporters like Germany, the euro zone's biggest economy, badly hit. In the first quarter, Germany's economy shrank 3.8 percent as demand for its high value goods, such as cars and machinery, collapsed.
The first quarter drop in the euro zone, compared to the quarter before, was far more than the consensus expectation just a few days ago, when most economists were predicting a quarterly decline of around 2 percent. But figures Wednesday already showed that industrial production — key to the European economy — was suffering worse than expected.