The Institute for International Finance (IIF) says that the euro zone has already slipped into an economic recession.

The international association of over 450 financial institutes said in its economic outlook report that the economy of the euro zone worsened last month and has entered a recession.

The institute predicted that with an increased fiscal deficit, the euro zone economy will see a two-percent contraction in gross domestic product in the fourth quarter of this year. It also forecast the region’s economic growth for next year at minus one percent.

The IIF report said that economic woes are spreading from Europe to other regions around the globe as European policy-makers have failed to cope with the euro zone economic crisis.