(Reuters) - Europe's two largest economies, Germany and France, both shrank markedly in the last three months of 2012, suggesting the euro zone has slipped deeper into recession.
The German economy contracted by 0.6 percent on the quarter, official data showed on Thursday, marking its worst performance since the global financial crisis was raging in 2009.
France's 0.3 percent fall was also a touch worse than expectations.
Worryingly for Berlin, it was export performance - the motor of its economy - that did most of the damage although economists expect it to bounce back quickly.
"In the final quarter of 2012 exports of goods declined significantly more than imports of goods," the German Statistics Office said in a statement.
The euro hit a session low against the dollar after the weaker than forecast German reading.
Back revisions to the French figures showed its output fell by 0.1 percent 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.
While the European Central Bank's pledge to do whatever it takes to save the euro has taken the heat out of the bloc's debt crisis, even its stronger members are gripped by an economic malaise that could push debt-cutting drives off track.
French Prime Minister Jean-Marc Ayrault acknowledged for the first time on Wednesday that weak growth was putting his government's deficit goal for 2013 out of reach.
Figures for the whole euro zone are due at 1000 GMT and forecast to show a 0.4 percent fall on the quarter, pushing it deeper into recession.
Economists say it may also shrink in the first quarter of 2013 although more resilient Germany is expected to rebound.
"The chances that the (German) economy will return to growth at the beginning of this year are very good. The early indicators are all pointing upwards," said Andreas Rees, chief German economist at Unicredit.
"The question is how strong the first quarter will be. We expect growth of 0.3 percent but it could be more."
Dutch GDP dropped 0.2 percent over the quarter, keeping it in recession, while the Austrian economy shrank at the same rate.
http://www.reuters.com/article/2013/02/14/us-europe-economy-idUSBRE91D0CX20130214
