Eurozone dodges recession with weak fourth-quarter growth

The International Monetary Fund said on Monday that Germany, Europe’s biggest economy, and Italy would avoid recessions this year, as European growth proved “more resilient than expected” despite the war

Operators work at Enagas regasification plant, the largest LNG plant in Europe, in Barcelona, Spain. — AP file photo

By AFP

Published: Tue 31 Jan 2023, 6:55 PM

The eurozone economy will avoid a recession this winter after recording weak-but-positive growth of 0.1 per cent in the fourth quarter of 2022, official data showed Tuesday.

The figure is lower than the 0.3 per cent growth recorded in the third quarter of 2022, but better than forecasts of a contraction by economists.

The data will be welcome after fears of a deep recession following Russia’s war in Ukraine, which unleashed sky-high energy prices and stoked inflation to record levels.

The International Monetary Fund said on Monday that Germany, Europe’s biggest economy, and Italy would avoid recessions this year, as European growth proved “more resilient than expected” despite the war.

Official data in Germany, however, showed that Europe’s biggest economy unexpectedly shrank in late 2022, contracting by 0.2 per cent in the October to December period compared to the previous quarter.

Italy’s economy also retreated in the final quarter of 2022, decreasing by 0.1 per cent, official data showed on Tuesday.

But France dodged a contraction after recording growth of 0.1 per cent in the fourth quarter as the eurozone’s second biggest economy expanded by 2.6 per cent in 2022.

The European Union’s statistics agency said the single currency area’s economy grew by 3.5 per cent in 2022 — higher than China’s at three per cent and the United States at 2.1 per cent.

The figure for the eurozone is better than the European Commission’s forecast in November of 3.2 per cent.

The economy of the 27-nation EU as a whole, including the countries using the euro, grew by 3.6 per cent in 2022.

The EU had been downbeat about the eurozone economy late last year, but the bloc’s economy commissioner Paolo Gentiloni was more optimistic this month.

“There is a chance to avoid deep recession and to enter a more limited, shallow contraction,” Gentiloni said two weeks ago.

The IMF predicted the EU’s single currency area would grow in 2023 by 0.7 per cent. — AFP