Eurozone slips into recession

The eurozone has officially slippped into recession after European Union (EU) statisticians estimated the economy of its 15-member states shrank by 0.2 per cent in the third quarter. Eurostat, the European Union's statistics office, released the figures on Friday. The fall follows a 0.2 per cent economic contraction in April-June. Two consecutive quarters of shrinking growth is a widely accepted definition of technical recession. Year-on-year economic output grew by 0.7 per cent in the third quarter - half of its growth rate in the second quarter. The eurozone performance was weaker than that of the US, where output fell 0.1 per cent on the quarter and grew by 0.8 per cent in annual terms. German decline Traders believe the eurozone's decline was prompted largely by a technical recession in Germany, Europe's biggest economy. Italy, the eurozone's third-biggest economy, is also classified as being formally in recession. France, Europe's second largest economy, defied expectations on Friday by posting a 0.1 per cent growth in the third quarter. Howard Wheeldon, financial analyst at BGC International based in London, told Al Jazeera: "It means confidence in the economy is going out the door. We have moved from a period of growth into a period of decline. "Germany is the economic engine of the eurozone and it is the most powerful within the eurozone. It is the one we will all be watching to see when that decline halts. "I think it will be 2009 ... we have got to baton down the hatches." Troubled forecast The news came as Hong Kong announced it too had formally tipped over into recession. The announcements will serve to deepen fears that a global recession is unavoidable and also follows a bleak assessment of the financial crisis released by the Organisation for Economic Co-operation and Development (OECD). The OECD on Thursday slashed its economic output forecasts for major economies and said its 30-strong membership appeared to have entered a recession. The news that more major economies have slipped into recession will put further pressure on the G20 - the world's top 20 economic powers - to find a way of avoiding all-out global financial meltdown. The G20 leaders are holding an emergency summit in Washington this weekend to discuss the financial crisis. George Bush, the US president, said the talks would focus on the following five objectives: understanding the causes of the crisis, reviewing the effectiveness of responses, developing principles for reform, launching a specific plan and assuring the world that free-market principles were the only way to reach propsperity. Nicolas Sarkozy, the French president, said on Friday that Russian and EU positions ahead of the G20 summit were very close. Sarkozy made the comment during a joint press conference with Dmitry Medvedev, the Russian president, following an EU-Russia summit in the French city of Nice. Immediately after the meeting, Sarkozy and Medvedev will fly directly to the G20 meeting in Washington.