The Eurozone economy contracted marginally by 0.1% in the first quarter of 2023 compared to the previous quarter, against a previous estimate of 0.1% growth, according to data published by Eurostat. In the last quarter of 2022, GDP had fallen by 0.1% in the Eurozone, which means that the European economy entered a technical recession.
It is recalled that a technical recession is defined as two consecutive quarters with negative growth. The weak pace of the Eurozone economy in the first quarter is attributed to a reduction in government spending and household spending, according to Eurostat. It was also preceded by Germany’s slide into recession. Along with Germany, GDP also fell on a quarterly basis in Greece, Ireland, Lithuania, Malta and the Netherlands.
The largest quarter-on-quarter growth was recorded by Poland at 3.8% compared to the previous quarter, followed by Luxembourg at 2.0% and Portugal at 1.6%.
Conversely, the largest decreases were recorded in Ireland with -4.6%), Lithuania with -2.1% and the Netherlands with -0.7%.
Compared to the same quarter last year, seasonally adjusted GDP increased by 1%. The euro zone suffered the mildest recession possible over the winter, after Russia’s war in Ukraine sent energy prices skyrocketing, Bloomberg reported, adding that the data was a blow to European politicians and officials. of the European Central Bank who believed it would be possible to avoid recession despite high inflation.
At the same time, however, it will be found that the significant support of households to deal with the energy crisis removed the possibility of more serious economic consequences.
However, the Eurozone economy has little chance of returning to growth next quarter, and therefore governments will continue to tighten fiscal support. The ECB is however unlikely to change policy, continuing interest rate hikes, as it considers that addressing inflationary pressures is a prerequisite for sustainable economic expansion.
