Ireland's the First Euro Economy Hit by Recession

Ireland is now in a recession, the country's Central Statistics Office said Thursday, after recording that the Irish economy shrank for a second consecutive quarter in the three months through June.

Gross domestic product shrank by 0.5 percent in the second quarter from the previous quarter, when it was down by 0.3 percent, the statistics office said.

Compared with a year earlier, GDP was down 0.8 percent.

Ireland's economy has been ravaged by a crash in house prices, which has contributed to a fall in consumer spending and a massive drop in overall investment.

Ireland is the first of the 15 European countries that use the euro to fall into a recession in the current market turmoil, but the European Commission has predicted that Germany, Spain and Britain will soon descend into recession.

The euro-zone as a whole recorded an economic contraction of 0.2 percent in the second quarter, although as a group it is expected to escape technical recession -- commonly defined as two straight quarters of GDP contraction -- by growing at a very modest 1.3 percent in the coming third quarter.