The euro zone has surprisingly slipped into recession. Economic output fell by 0.1 percent in the first quarter. The statistics office Eurostat also had to correct the figures for the final quarter of 2022 into the red.
An important reason is the weakness of the German economy. In the largest economy in Europe, gross domestic product even shrank by 0.5 and 0.3 percent in the two quarters.
The European Central Bank has nevertheless announced the next rate hike for next week. It also dampens the economy. The ECB but sees persistent inflation as the bigger problem.
The acute bout of weakness in the German economy has now also dragged Europe into recession. The economic performance of Euro-Zone surprisingly decreased at the beginning of the year. That shrank in the first quarter Gross domestic product (GDP) up 0.1 percent quarter-on-quarter, it said Statistics office Eurostat on Thursday with In a previous estimate, Eurostat had determined slight growth of 0.1 percent.
The statisticians also corrected their figures for the fourth quarter of 2022. The euro economy had already shrunk by 0.1 percent by the end of the year. The currency area has thus slipped into a so-called technical recession. The data refer to the 20 countries of the euro zone. Croatia joined at the turn of the year.
The recession is still very mild. The correction and minus may seem small. But they show how strong Germany’s relapse is Economy burdened in Europe. Germany is by far the largest economy both in the euro zone and in the entire EU. For Germany, too, the statisticians had to correct the first estimates significantly because the bad news has been piling up since March – especially from industry.
of Germany Gross domestic product (GDP) had already fallen sharply by 0.5 percent in the fourth quarter. Instead of the hoped-for recovery, it fell again by 0.3 percent in the first quarter. Without the decline in GDP in Germany, the economy in the euro zone would not have contracted in the first quarter.
Recession in the euro zone puts the ECB under pressure
The collapse of the economy brings the European Central Bank (ECB) in distress. The ECB has already announced a further increase in key interest rates for next week. She fights against the stubbornly high Inflation recently at 6.1 percent. Since the turnaround in interest rates, the ECB has raised the key interest rate by 3.75 percent in an unprecedented seven steps. Higher interest rates will also dampen the economy. The ECB rated the high Inflation but as the greater danger to the development of the economy.
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The countries of the euro zone are currently developing very differently. The strongest growth was achieved in small Luxembourg with 2.0 percent and Portugal with 1.6 percent. Ireland reported a slump of 4.6 percent compared to the previous quarter. The economy also contracted noticeably in Russia’s Baltic neighbors Lithuania (minus 2.1 percent) and Estonia (minus 0.6) as well as in the Netherlands (minus 0.7).
In a year-on-year comparison, the economy grew by a revised 1.0 percent in the period from January to the end of March. In a previous estimate, growth of 1.3 percent had been determined.
The entire European Union stayed just above the zero line. The economies of the 27 countries grew minimally by 0.1 percent in the first quarter. Poland made the largest contribution to this with GDP growth of 3.6 percent. Poland belongs to the EU but not to the euro zone.
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