The economy of the 15-nation euro zone shrank over the past three months and is now considered to be in recession, the first such prolonged contraction since the adoption of the euro as a common currency a decade ago. The Eurostat statistics agency reported on Friday that growth in the economic zone shrank 0.2 percent from July through October, compared with the prior three months. Following a similar decline from April through June, the euro zone economy has met one of the common definitions of recession -- two consecutive quarters of decline.
European leaders initially thought the current financial crisis would be confined largely to the United States, but they now face the most serious test to date of the economic integration symbolized by their use of the euro. The European Central Bank was slower to begin cutting interest rates than the Fed, the Bank of England and other major central banks, and has moved in smaller steps even after acknowledging that it needed to try to stimulate growth. Analysts now regard further rate cuts in the euro zone as a given. The Eurostat report adds to the accumulating evidence of a broad global recession.