The eurozone economic system grew within the ultimate quarter of 2022 regardless of economists’ predictions of a downturn, boosting hopes that the area will keep away from a recession.
Milder climate and authorities help cushioned the affect of hovering power costs, serving to the area’s economic system broaden by 0.1 per cent between the third and fourth quarter, in response to official information revealed by Eurostat on Tuesday.
The growth was higher than the 0.1 per cent drop forecast by economists polled by Reuters. The identical survey had additionally predicted one other quarter of contraction through the first three months of 2023.
Bert Colijn, senior economist at ING, the financial institution, stated the area’s economic system was exhibiting “unimaginable resilience” within the face of the power disaster triggered by Russia’s invasion of Ukraine.
Tuesday’s information signifies that the area managed to develop in every quarter of 2022 and by 3.5 per cent over the course of the yr.
John Leiper, chief funding officer at Titan Asset Administration, stated the figures have been “fairly an achievement” given the headwinds going through the area.
Companies and households additionally needed to deal with increased borrowing prices, because the European Central Financial institution raised rates of interest by 2.5 proportion factors through the second half of final yr to fight inflation that peaked at 10.6 per cent.
Just a few months in the past, economists had forecast a deep recession and power shortages. However a much less chilly winter than feared, falling gasoline costs and beneficiant authorities help have all helped keep away from that situation.
Tuesday’s figures are prone to function within the concerns of the ECB, which is looking for to make sure that inflation returns to its 2 per cent aim. Markets anticipate the ECB governing council to extend the benchmark deposit charge by 0.5 proportion factors to 2.5 per cent when it meets on Thursday.
The central financial institution’s resolve can be prone to be bolstered by the newest information on costs. Inflation in France accelerated in January whereas Spain’s core shopper value progress, which strips out meals and power, rose to the very best stage on report.
Earlier within the day, information confirmed France’s economic system additionally managed to keep away from falling into recession.
The eurozone’s second-largest economic system grew 0.1 per cent between the third and fourth quarters, stated France’s nationwide statistics bureau Insee. The determine beat economists’ expectations of no change.
Tullia Bucco, economist at UniCredit, stated the French information was “encouraging information”. Nevertheless, Charlotte de Montpellier, senior economist at ING, stated this yr could be “characterised by near-stagnation” of France’s economic system.
Germany reported a fourth-quarter contraction of 0.2 per cent on Monday, inserting the eurozone’s largest economic system on the point of recession.
Information revealed on Tuesday confirmed Italy’s economic system additionally contracted, however by simply 0.1 per cent — a smaller quantity than feared. Spain’s economic system expanded by 0.2 per cent, in response to figures revealed final week.
However detailed nationwide information from France and Spain confirmed a pointy fall in imports, suggesting demand amongst companies and households is weakening. Family consumption fell sharply in each international locations, with Germany additionally reporting that non-public spending was the driving force of the autumn in gross home product.
The eurozone determine was additionally boosted by a robust efficiency by Eire, which recorded progress of three.5 per cent. The area’s GDP would haven’t grown with out Eire’s contribution.
“The worst eventualities for this winter have been prevented,” stated Colijn. “However the economic system stays sluggish.”
