The euro area’s gross domestic product increased by 0.1 percent in the first quarter of 2023 compared to the previous quarter, after remaining unchanged in the last three months of 2022, according to Eurostat figures.
For the European Union as a whole, GDP growth rebounded with an increase of 0.3 percent after a decline of 0.1 percent in the fourth quarter of 2022, according to Eurostat.
Germany, the largest economy in the European Union, saw growth stagnant at zero percent from the previous quarter. On an annual basis, Germany was the only country in the single currency area that recorded a contraction of 0.1%.
Although inflation in the Eurozone has eased somewhat, it is still at levels of 6.9% y/y, more than three times the European Central Bank’s target of 2.0%.
The European Central Bank has its next meeting next Thursday, and all eyes are on it to see if it will raise interest rates again, and if so, by how much.
The European Central Bank has raised interest rates to 3.5% since July last year, and its chief economist, Philip Lane, said this week that “this is not the time to stop raising rates.”
Preliminary data from Eurostat indicated that Germany was still grappling with the fallout from Russia’s war in Ukraine, particularly the shift away from the Russian gas that was boosting much of its industry.
The strongest GDP performer on a quarterly basis was Portugal, growing by 1.6 percent, followed by Spain, Italy and Latvia with growth of 0.5 percent.
Ireland recorded a quarterly decline of 2.7 percent and Austria by 0.3 percent.
Economic analysis firm Oxford Economics said Eurostat data for the euro zone was slightly lower than its estimate of 0.2 percent.
It said “we don’t expect growth to pick up significantly through 2023” and that the industry’s strong start early this year was “likely to be short-lived” as inflation and a tougher financial climate weighed on growth.
2023-04-28 10:52:50
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