Euro Zone Economy Shrank in Fourth Quarter of 2011 — Five members of the euro zone, including Italy, fell into recession in the final quarter of 2011, official data showed Wednesday, as the sovereign debt crisis and the imposition of austerity measures discouraged consumers from spending and businesses from investing. But the zone’s two largest economies, France and Germany, held up better than expected.

The 17-nation euro zone contracted by 0.3 percent from the third quarter of the year, Eurostat, the European statistics agency said— the first such decline since the second quarter of 2009. That contraction was smaller than the 0.4 percent economists had expected, but the pain was nonetheless acute among smaller countries and in Southern Europe — ground zero of the debt crisis.  Read more

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