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Eurozone economy shrinks in first quarter, marking longest recession

Central BankMoney and Monetary PolicyProductivityItalyEuropean Central Bank

WASHINGTON -- The Eurozone economy contracted 0.2% in the first three months of the year compared with the previous quarter, marking the region's longest recession since its single currency was created in 1999.

The 17-nation Eurozone now has been in recession for six straight quarters, exceeding the five-quarter downturn from 2008-2009, according to data released Wednesday by Eurostat, the region's statistical office.

The first-quarter performance was an improvement over the final three months of 2012, when the Eurozone economy shrank 0.6% on a quarter-over-quarter basis, but the figure came in below economists' expectations of a 0.1% contraction.

The European recession has reduced demand there for foreign goods, which has harmed the U.S. economy.

Still, the U.S. economy has been growing since the end of the Great Recession in 2009, and expanded at a 2.5% annual rate in the first quarter.

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The European Central Bank has been trying to boost growth in the region, which has an all-time-high 12.1% unemployment rate.

The central bank cut its key interest rate this month to a record low level and is considering dropping the rate it pays on excess bank deposits to below zero.

Germany, the region's largest economy, nudged back into positive economic growth in the first quarter. It expanded 0.1% in the first quarter after contracting 0.7% in the fourth quarter of last year.

But the Eurozone's other major economic players all remained stuck in recession.

The French economy shrank 0.2% in the first quarter, the same as in the fourth quarter of last year. Italy's economy contracted 0.5% in the first quarter, an improvement over the 0.9% decline at the end of last year.

[For the Record, 10:29 a.m. PDT May 15: An earlier version of this post stated that the economic growth figures for the Eurozone and individual countries in the region were based on an annualized rate. The figures are compared to the previous quarter.]

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