The eurozone entered a technical recession at the beginning of the year with a fall in GDP for two consecutive quarters, of 0.1% between January and March and of the same magnitude from October to December, according to revised figures published this Thursday by Eurostat.
The European Statistical Institute had so far forecast stagnation (0%) in the last quarter of 2022, compared to the previous quarter, and growth of 0.1% in the first quarter of 2023. The sharp downward revision This is largely explained by that of Germany, which itself announced at the end of May that it had entered a recession, penalized by the difficulties of its industry.
The latest figures cloud the outlook for the year as a whole.
Optimistic growth forecast
In mid-May, the European Commission forecast growth of 1.1% in 2023 in the 20 countries that share the single currency. The figure now looks “optimistic,” Charlotte de Montpellier, an economist at ING bank, told AFP. It provides only 0.5% throughout the year. “Since the spring, all the data has been bad,” she said, pointing in particular to German industrial production and new orders.
According to her, “the European economy is in a phase of stagnation and has had difficulties getting through the winter due to the energy shock.” Although oil and gas prices have fallen in recent months, the rebound in prices last year had a significant impact on the confidence of households who are reducing their consumption.
Inflation remains high, at 6.1% in May, despite a drop, and price increases are now affecting food products, manufactured goods and services. The European economy is also affected by the rise in interest rates by the European Central Bank (ECB), which reduces the demand for credit and slows down investment, especially in the real estate sector, causing a drop in construction activity . The slowdown in the United States and the weaker-than-expected recovery in China are also weighing on exports.
Source: BFM TV
