BNR – The 20-country Eurozone economy shrank by 0.1% between January and March, following a 0.1% contraction in the last three months of 2022.
A recession is commonly described as an economy contracting for two successive three-month periods, or quarters.
Rising food and energy costs have had an impact on people in the eurozone, as in other countries. Consumer spending in the EU declined 0.3% in the first quarter of 2023, after falling 1% in the previous quarter.
Narrow Escape for Eurozone
According to preliminary estimates, the eurozone averted a recession and increased by 0.1% in the first quarter of 2023. However, revised Eurostat data indicated that it had declined in the first quarter.
Furthermore, updated figures from Germany, Europe’s largest economy, aided the country’s fall into recession. Germany said last month that it had entered a recession at the start of the year, with the economy contracting by 0.3% in Q1.
Oxford Economics professor Riccardo Fabiani predicted only “soft growth” in the eurozone in the next months. He went on to say that this is due to the fact that interest rates continue to rise and inflationary concerns are still strong.
European Economy Falling
The gloomy news follows a difficult year for Europe’s economy. The cost of living has risen due to higher energy prices caused by Russia’s attack on Ukraine.
In order to mitigate surging prices, the European Central Bank raised interest rates by 3.75 percentage points.
When compared to the previous quarter, Ireland’s economy declined by 4.6% in the first quarter of 2023. Its economy shrank by 0.3% compared to the same period the previous year.
Lithuania’s economy suffered the most damage as compared to the previous year, shrinking by 3.7%.