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Eurozone economy shrinks by 0.6pc in last quarter of 2012

Uh-oh. A dramatic drop in the Eurozone economy spells bad news for hopes of a further boom in Irish exports.

Image: YVES LOGGHE/AP

THE SIZE of the Eurozone economy fell by 0.6 per cent in the fourth quarter of 2012 – its steepest fall in nearly four years.

Figures produced by Eurostat showed that the combined economies of the 17 countries that use the euro produced 0.9 per cent less in the fourth quarter of 2012 than they had in the equivalent period of 2011.

When all 27 EU member states are taken into account, growth fell by 0.5 per cent from Q3 to Q4, and by 0.6 per cent in a year.

The 0.6 per cent fall is the worst since the immediate onset of the financial crash in 2008; a single quarter has not seen a decline so steep since the first quarter of 2009 when the Eurozone economy shrank by a whopping 2.8 per cent.

In that case, the decline levelled off to 0.2 per cent in the second quarter and back into growth three months later.

Portugal had the steepest decline of any country; its economy shrank by 1.8 per cent in the fourth quarter, while Cyprus saw a drop of 1.0 per cent and Italy – where Mario Monti completed his final quarter as stand-in prime minister – shrank by 0.9 per cent, equalling the fall in Hungary.

Latvia had the strongest growth, at 1.3 per cent, ahead of nearby Lithuania on 1.0 per cent and Estonia at 0.9 per cent.

The figures do not include Ireland, which is not due to confirm fourth quarter figures until the end of March, but the figures are still bad news for Ireland – with general acceptance that trouble for economies in mainland Europe will impede the chances of an export-led Irish recovery.

On an annualised basis, Latvia had the highest annual growth at 5.7 per cent; Estonia is the highest of the euro users with 3.4 per cent.

At the other end, Greece’s economy shrank by an estimated 6 per cent in 2012, while Portugal fell by 3.8 per cent and Cyprus by 3 per cent.

The UK economy shrank by 0.3 per cent in the fourth quarter, and grew by 0 per cent in 2012 as a whole.

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Gavan Reilly

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