Eurozone GDP slows to 0.2% as Geithner jets in

The European Union's official statistics agency confirmed on Tuesday said that combined gross domestic product of the 17-strong euro zone during the three months to September was up 0.2% from the second quarter and 1.4% from the third quarter of 2010.

Those figures were in line with expectations, and unchanged from Eurostat's preliminary estimates. Eurostat raised its estimate for the year-to-year rate of growth in the second quarter, to 1.7% from 1.6%.

The sharp slowdown in GDP growth comes as economists predict a full-blown recession for Europe during 2012 as the troubled banking sectors pulls back from making loans and called on the European central bank to embark on a programme of quantitative easing that would involve the buying up of peripheral debt. US Treasury secretary Tim Geithner is expected to call for QE during meetings in Europe on Tuesday.

Eurostat said spending rose by 0.3% on a quarterly basis, following a 0.5% decline in the three months to June. Business investment rose modestly, while public-sector spending was flat.

The other main contribution to growth came from exports, which rose 1.5% on a quarterly basis, outstripping a 1.1% rise in imports and boosting GDP by 0.2%, equalling the contribution from household spending. However, that increase in demand was partly met by businesses drawing down on inventories, which reduced GDP by 0.2%.

Mired in a long-running fiscal crisis, the euro zone's growth performance was weak by international standards, with the U.S. and U.K. economies expanding by 0.5% during the same period, while the Japanese economy expanded by 1.5%.

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