BRUSSELS/BERLIN: The euro zone slipped deeper than expected into recession in the last three months of 2012 after its largest economies, Germany and France, shrank at the end of a wretched year for the region. It marked the currency bloc's first full year in which no quarter produced growth, extending back to 1995. For the year as a whole, gross domestic product ( GDP) fell by 0.5 per cent Economic output in the 17-country region fell by 0.6 per cent in the fourth quarter, EU statistics office Eurostat said on Thursday, following a 0.1 per cent output drop in the third. The quarter-on-quarter drop was the steepest since the first quarter of 2009 and more severe than the average forecast of a 0.4 per cent drop in a Reuters poll of 61 economists. Within the zone, only Estonia and Slovakia grew in the last quarter of the year, although there are no figures available yet for Ireland, Greece, Luxembourg, Malta and Slovenia. The big economies set the tone. Germany contracted by 0.6 per cent on the quarter, official data showed, marking its worst performance since the global financial crisis was raging in 2009. France's 0.3 per cent fall was also slightly worse than expectations. Worryingly for Berlin, it was export performance - the motor of its economy - that did most of the damage, declining significantly more than imports, although economists expect it to bounce back quickly. The euro hit a session low against the dollar after the weaker than forecast German reading and dropped again after the release of full euro zone figures. Back revisions to the French figures showed its output fell by 0.1 per cent in each of the first and second quarters of 2012, meaning the country has already experienced one bout of recession in the last twelve months.

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