Spain has fallen into recession and New Zealand's downturn has deepened today in further indications of the difficulties facing the global economy.

Spain tumbled into recession for the first time in 15 years.

The ISA activity indicator, which tracks gross domestic product (GDP) contracted 1.5 per cent between October and December, compared to the same period last year, according to figures from the Economy Ministry.

The economy shrank 0.2 per cent in the three months to September, and today's figures confirm expectations that Spain would enter recession before the end of 2008.

The technical definition of a recession is two quarters of negative growth.

Earlier today, figures showed that New Zealand's economy suffered its biggest contraction in eight years in the third quarter, reinforcing expectations that the country will remain in recession well into 2009.

New Zealand is suffering its first recession in a decade after it recorded two quarters of shrinking output between January and June this year.

Today's figures show GDP fell a seasonally adjusted 0.4 per cent as consumers spent less, businesses cut investment and weak global markets and prices hit exports.

The figures added to growing calls for further cuts in interest rates.

The central bank has cut rates four times since July by a total of 325 basis points to a five year low of 5 per cent.

Most analysts see rates falling to 3.5 per cent by mid-2009.

The news from Spain and New Zealand came ahead of latest GDP statistics from the UK, which showed the economy shrank 0.6 per cent in the third quarter.

Britain's economy shrank 0.6 per cent during the third quarter of the year - the first third quarter contraction since 1992 and the worst single quarter since 1990.

Fourth quarter figures, released in the New Year, are expected to show the country is officially in recession.

There was further misery in the US. The economy endured its worst quarter since the third quarter of 2001, in the aftermath of the Spetember 11 terrorist attacks, shrinking 0.5 per cent.

In November, the National Bureau of Economic Research (NBER) said the US had been in recession since December last year.

Today's figures have added to expectations that the fourth quarter of 2008 will show a further plunge in GDP, with some analysts predicting a drop of as much as 6 per cent.

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