IN recession is now eurozone economy as its GDP contracted for two straight quarters after the shock of the energy crisis. In particular, the first quarter of 2022 recorded a slight contraction of 0.1% from the previous estimate of growth of 0.1%, as 20 eurozone countries revised their initial estimates of their economies downward. Recall that in the fourth quarter of 2022, GDP decreased by 0.1% in the Eurozone and by 0.2% in the EU.

This means that the eurozone meets the technical definition of a recession after completing two consecutive quarters. negative growtheven if it is marginal. As financial analysts say, this is the mildest recession the eurozone could experience since the Russian invasion of Ukraine, which sent energy prices. The unfavorable development, however, will be a blow to both politicians and ECB officials, who have repeatedly expressed the view that a recession will eventually be avoided, even if inflation soars to its highest level since the introduction of the euro. Policy makers, however, can take solace in the fact that the billions of euros spent to bail out eurozone households have paid off, as at least a larger blow to their economies has been avoided.

However, with the economy estimated to have returned to positive growth in the current quarter, governments will continue to pull back on the support they have provided so far. In the meantime, the ECB is not expected to change course, but to keep raising interest rates as it believes a return of inflation close to its 2% target is a necessary condition for sustained growth. As Bloomberg economist Maeve Cousins ​​points out, “This review of the eurozone economy does not fundamentally change the big picture, as the economy is weak but not collapsing.” The same economist predicts that the eurozone will return to positive growth this year, but remain sluggish throughout its period. As reasons, he cites the transition to a restrictive monetary policy and the decline in global demand, which slows down economic activity.

Published the latest data on Germany, according to which the largest economy in Europe is in recession. At the same time, the economies of five other eurozone countries — Greece, Spain, Lithuania, Malta and the Netherlands — contracted in the first quarter of the year, while Estonia has been stagnating since the end of 2021. improve as the European Commission forecasts growth of 1.1% this year and 1.6% next. As for the European Union, its GDP grew marginally by 0.1% in the first quarter compared to the previous quarter, while it declined by 0.2% in the fourth quarter. Compared to the same quarter last year, seasonally adjusted GDP increased by 1.0% in both the euro area and the EU. in the first quarter of 2023 after +1.8% in the eurozone and +1.7% in the EU. previous quarter.

This is the mildest recession the eurozone could experience since the Russian invasion of Ukraine.

Compared to the previous quarter of 2022, seasonally adjusted GDP increased by 1.0% in the euro area and the EU. in the first quarter of 2023 after rising by 1.8% and 1.7% respectively in the previous quarter.

As announced yesterday and ELSTATGreece’s GDP contracted by 0.1% in the first quarter, while it grew by 2.1% year-on-year. Thus, Greece is ranked 9th with the highest growth rate in the Eurozone in the first quarter of 2023.

The largest quarterly growth was recorded in Poland with +3.8% qoq, followed by Luxembourg (+2.0%), Portugal (+1.6%). The largest declines were recorded in Ireland (-4.6%), Lithuania (-2.1%) and the Netherlands (-0.7%).

According to Eurostat, the weakness of the eurozone in the first quarter is associated with a reduction in government spending and household spending. As Bloomberg comments, growth is likely to have picked up again in the current quarter, and governments will continue to tighten fiscal support. The ECB is also unlikely to change course and is expected to raise interest rates in the next quarter as it nears the end of its historic tightening campaign and views inflation control as a necessary condition for sustained economic growth.