BRUSSELS (Reuters) - The euro zone economy shrank more than previously estimated in the last three months of 2008 and the third quarter was weaker too, revised data showed on Tuesday, sending the euro sharply lower against the dollar.
Gross domestic product in the 15 countries that were using the euro in the fourth quarter contracted 1.6 percent against the previous three months, rather than the previously reported 1.5 percent, EU statistics office Eurostat said. The zone has since expanded to 16 countries.
The euro fell against the dollar on the data to $1.3270 from $1.3330, as the data suggested the 2009 euro zone contraction could be even deeper than previously expected.
“The starting point is weaker and highlights that the average growth for 2009 will be very negative — we forecast contraction of 4.3 percent,” said Juergen Michels, economist at Citigroup.
The drop is the deepest ever quarterly fall and was brought on by a collapse in external trade, which on balance subtracted 0.9 percentage points and investment another 0.9 points — more than the previously reported 0.6 point deduction.
The plunge in private consumption appeared less dramatic than before, taking away a further 0.2 points against the previously reported 0.5 points.
Government spending added 0.1 points rather than subtracting the same amount as previously reported and inventories added 0.3 points rather than 0.6, Eurostat data showed.
“Worryingly, it is far from inconceivable that euro zone GDP contraction was even deeper in the first quarter of 2009, given largely dire data and survey evidence,” said Howard Archer, economist at IHS Global Insight. “This will hopefully have marked the low point in the downturn, although recovery currently still looks some way away.”
In year-on-year terms the contraction was 1.5 percent rather than the previously reported 1.3 percent, Eurostat said.
The statistics office also revised down the third quarter number to a contraction of 0.3 percent from a fall of 0.2 percent in quarterly terms, leaving the year-on-year figure unchanged at 0.6 percent growth.
As a result, the euro zone economy grew 0.8 percent in the whole of 2008, less than a third of the 2.6 percent in 2007 and less than the 1.1 percent in the United States, although better than the 0.6 percent contraction in Japan.
In the whole EU of 27-member states, gross domestic product grew 0.9 percent in 2008 against 2.9 percent in 2007.
(Additional reporting by Marcin Grajewski and Sarah Luehrs)
Reporting by Jan Strupczewski, editing by Mark John/David Stamp