Europa (UE)

Europe narrowly avoids recession in 2023. And Italy?

The Eurozone narrowly avoided a technical recession in the last three months of 2023, despite the contraction in Germany and above all thanks to strong growth in Spain and Portugal and a modest increase in Italy: this is the latest snapshot of GDP estimates fourth quarter from Eurostat.
Preliminary data from the European Union's statistics office showed that gross domestic product in the 20 countries that share the euro remained unchanged in the fourth quarter compared to the previous three months.
GDP was flat compared to the previous quarter and increased by 0.1% on an annual basis.
According to the preliminary estimate, the Eurozone would have recorded growth of 0.5% for the whole of 2023.
The numbers fit into a context that is not dramatic for the old continent, but still not very encouraging.
Germany stands out as the sick man of Europe, while France shows signs of uncertainty.
Italy avoids the worst case scenario with growth, albeit slight.
Surprises from Spain and Portugal.
Meanwhile, however, the gap between Europe and the United States is growing, whose economy increased by 0.8% in the fourth quarter compared to the previous three months, and at an annual rate of 3.3%, better than expected.
In a weak Europe, Italy grows (slightly) in 2023.
The data The European economy failed to expand at the end of 2023, with stagnation lasting more than a year due to rising commodity prices energy, more expensive credit and slowing growth in powerful Germany.
The result underlines that the bloc remains under pressure from uncertain global demand and the consequences of the energy crisis.
There is no immediate end in sight to the slowdown according to analysts: private sector surveys last week pointed to an eighth month of contraction in January.
Speaking at the ECB policy meeting last week, President Christine Lagarde said she expected GDP to stagnate in the fourth quarter.
read also Economic crisis in Europe, where are we at? Why there is still no optimism As for Italy, GDP increased by 0.2% in the fourth quarter, beating economists' expectations of stagnation thanks to the industrial and services sectors.
In 2023, the economy grew by 0.7%.
Growth will likely slow slightly this year, with the ECB forecasting it will stand at 0.6%.
The impact of the ECB's high interest rates could test the country's resilience, even after inflation declines, experts wrote in Bloomberg.
What happened in the European powers: who is growing and who is slowing down? Germany.
Europe's largest economy contracted 0.3% in the final quarter of the year, according to data released on Tuesday.
The country came close to a technical recession thanks to an upward revision of data for the third quarter, when the economy appeared stagnant.
The situation may not improve soon.
Business surveys even signaled a slight deterioration in sentiment at the start of the year, and the Bundesbank warned that output would “stagnate at best” in the first quarter.
That's because foreign demand for German goods has shown few signs of recovery, while domestic consumers remain reluctant to spend money.
According to a projection by the Ifo Institute, GDP is expected to shrink by 0.2% between January and March.
“Companies in almost all economic sectors are complaining about falling demand,” said forecaster Timo Wollmershaeuser.
read also Why Germany is in crisis and what can happen now France.
The French economy failed to grow in the fourth quarter, according to preliminary data from statistics agency INSEE, in line with analysts' expectations.
The euro zone's second-largest economy remained stagnant at 0.0% in the final three months of last year, after a flat third quarter, INSEE said in its quarterly GDP report.
On average, the French economy grew 0.9% in all of 2023, compared to 2.5% growth in 2022 and 6.4% in 2021.
A rapid revival is not expected in 2024, as manufacturers they will recover only slowly after a long crisis and families will continue to feel the pressure of inflation, even if declining.
The prolonged slowdown represents a problem for Emmanuel Macron as his government relies on greater expansion to restore public finances and contain unemployment.
The president also faces political difficulties, with farmers prolonging protests to demand more support and less bureaucracy from the state.
Spain.
Spain, the eurozone's fourth-largest economy, contributed the most to the overall eurozone result with quarterly growth of 0.6% well above the expected 0.2% and driven largely by household consumption.
This pushed 2023 growth to 2.5%.
The country has recently performed better than other large eurozone nations largely because it faced a deeper contraction than others during the pandemic.
The Government is seeking to phase out aid packages put in place after Russia's war in Ukraine drove up energy costs.
Many of them, however, have been carried over to 2024, continuing to support the economy.

Author: A.W.M.

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