Euro zone economy slips into recession for first time in 15 years

The European Union's statistics office, Eurostat, estimated that the economy of the 15 countries using the euro shrank 0.2 percent in July-September against the previous quarter after contracting by the same amount in April-June.

The two quarters of contraction -- the result of this year's surges in the cost of credit, the euro and oil prices -- mark the first recession since the single currency was introduced almost a decade ago.

Two consecutive quarters of shrinking growth are a widely accepted definition of technical recession.

The quarterly decline was prompted mainly by a technical recession in the euro zone's biggest economy, Germany, and the third-biggest, Italy. The second-biggest economy, France, defied market expectations of a similar fate, growing by 0.1 percent in the third quarter.

The fourth-biggest economy, Spain, also contracted in the July-September period by 0.2 percent and the European Commission expects the country will be in recession after expected negative growth in the fourth quarter.

The euro region is already 'in recession', ECB council member Ewald Nowotny said yesterday in Brussels, Bloomberg reported. "Inflation expectations should come down fast and that will give the ECB room for additional expansionary measures."

Investors expect the ECB will lower its key rate by at least another half a percentage point at its next meeting on Dec. 4, Bloomberg also said citing Eonia forward contracts show.

Economists at Fortis and Morgan Stanley this week revised their outlooks to show the ECB cutting to 2 percent next year, while those at Deutsche Bank expect 1.5 percent to be reached for the first time.

Eurostat also said that inflation in the euro zone was zero on a monthly basis in October, confirming its earlier estimate that price growth slowed to 3.2 percent year-on-year from September's 3.6 percent.

The main reason behind the slower price growth was a 2.9 percent monthly fall in energy costs.