THE 15-COUNTRY euro zone has sunk into its first ever technical recession following a second quarter of negative growth, according to figures released yesterday by the EU's statistics office.

A flash estimate by Eurostat says gross domestic product in the countries sharing the euro fell by 0.2 per cent on average in the July to September period, after contracting by the same amount in April to June. A recession is generally defined as two consecutive periods of negative GDP growth.

Compared to last year's figures, euro area growth in the third quarter is up by 0.7 per cent, which is a sharp fall from the 1.4 per cent rise it registered in the previous period.

The larger 27-member EU also saw a 0.2 per cent drop in GDP this quarter after its growth remained unchanged in the April to June period.

The European Commission said the Eurostat estimate confirmed its autumn forecast, released at the beginning of November, which predicted that the EU's overall growth for 2008 would be 1.4 per cent, shrinking to 0.2 per cent by 2009. "Of course we have to wait until December or January to have a further revision of those estimates," said a spokesperson for EU economic and monetary affairs commissioner Joaquín Almunia, referring to Eurostat's data.

Germany and Italy appear to be worst hit by falling GDP, with both registering drops of 0.4 per cent in the second quarter and 0.5 per cent in the third.

Eurostat had no available data for Ireland's third quarter, but said the country did register negative growth in both the first and second quarters of this year, at -0.3 per cent and -0.5 per cent, respectively.

In its autumn forecast the commission predicted that real GDP in Ireland would decrease by an overall 1.5 per cent in 2008, mainly due to a sharp adjustment in the housing market and because of ties to lower growth in the euro area, the US and Britain.

In other Eurostat figures released yesterday the euro area's annual inflation for October was down to 3.2 per cent from 3.6 per cent in September. Ireland's figure comes in at 2.7 per cent.

The news comes as world leaders are meeting in Washington to discuss how to protect the global economy from the worst crisis to hit it in years. The EU is intending to use the summit to put forward its plan for reform of the international financial system, which includes a greater role for the International Monetary Fund in predicting crises and supporting countries in difficulty.