The economic system of the 17-nation euro zone shrank during the second quarter of the year as the sovereign debt crisis continued attacking member nations, Bloomberg reports.
Budget cuts and additional austerity measures that come with nations coping with the debt scourge pushed six of those nations into recessions. The region's gross domestic product fell 0.2 percent as compared to the year's first quarter, the European Union's statistics office said. As compared to the second quarter of last year, the euro zone economy lost 0.4 percent.
"Our baseline forecast is for euro-zone economic activity to suffer further contraction in the third quarter," chief European economist Howard Archer with IHS Global Insight in London told Bloomberg. "Tight fiscal policy in many countries, tight credit conditions, high and rising unemployment and muted global growth will continue to weigh down on euro-zone growth."
Investor confidence in August dropped in Germany, host of the region's biggest economy. The country is on a four-month streak of losses to consumer confidence.
The value of the shared currency of the European Union also lost ground against the world's reserve currency on Tuesday following the economic data about German sentiment and the regional economy's losses, according to Reuters.
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