The eurozone in recession in "all senses of the word" As expected, the eurozone economy shrunk in the third quarter. But, fortunately, not by quite as much as expected. Thursday's data did, however, confirm that the debt crisis in southern Europe is hitting the "core" economies in northern Europe, and analysts seem in agreement that it's going to get significantly worse. The Dutch economy contracted 1.1 per cent in the third quarter compared to the second quarter, and 1.4 per cent compared to last year's third quarter. Many economists had expected a contraction of about 0.2 per cent compared to Q2. Germany and France both managed to eke out a 0.2 per cent expansion in the third quarter compared to the second. It's France's first bit of growth all year. Overall, the eurozone contracted by 0.1 per cent in June to September, compared with Q2. It follows from a 0.2 per cent decline in the second quarter from Q1, according to flash estimates from Eurostat, the EU's statistical office. The 27 EU member countries did slightly better, however, with a combined expansion of 0.1 per cent in the third quarter compared to the second quarter. Props to Latvia and Estonia, which grew the most - by 1.7 per cent. The Guardian's Data Blog has taken Eurostat's rather boring data tables, and turned them into a cool interactive map to help you keep track of the region's economic decline. But, as Howard Archer at IHS Global notes, the latest data is really more of a confirmation of something everyone already knew (his emphasis): Given that this followed contraction of 0.2% quarter-on-quarter in the second quarter, this confirmed that the Eurozone is now in modest recession in all senses of the word. In reality, the Eurozone was already in recession in most senses of the word as a current record unemployment rate of 11.6% would testify. Indeed, the third quarter of 2012 marked the third Eurozone quarter-on-quarter GDP drop in four quarters (broken only by flat GDP in the first quarter of 2012) and left GDP down by 0.6% year-on-year (y/y) ... Latest data and survey evidence remain generally weak, and the odds currently strongly favour the Eurozone suffering further GDP contraction in the fourth quarter of 2012. Significantly, Germany looks to be in severe danger of contracting in the fourth quarter, as does France. Archer expects that the weak data will convince the ECB to reduce interest rates to 0.5 per cent from 0.75 per cent, and that it is "very possible" that this happens in December. Over at Capital Economics, Jennifer McKeown said she expected an even more difficult fourth quarter: The business surveys point to far worse to come throughout the region in the fourth quarter. With austerity starting to hit French households and German unemployment beginning to rise, the outlook for domestic spending is bleak even in the core. Guess it's going to be an austerity Christmas then.