Eurozone entered technical recession: EuroStat
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The energy crisis which was born out of sanctions on Russia, Europe's gas lifeline, had spiralled into a cost-of-living crisis, with inflation plaguing the Euro economies.
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Germany's second-largest refinery of BP in Gelsenkirchen, western Germany, on Jan. 30, 2023. (AP)
After two consecutive quarters of negative growth in real GDP, the Eurozone has officially entered recession, data from the EU’s statistics agency Eurostat reveals.
In the last quarter of 2022, GDP had decreased by 0.1% in the Euro area, and in the first quarter of 2023, the agency reported that the economy had shrunk by 0.1%.
Spending by households in the Eurozone fell by 0.3% in the first quarter of 2023 and by 1% in the fourth quarter of 2022. Moreover, revised data showed that the region's fourth quarter in 2022 was adjusted from 0% to -0.1%.
The revision was made in April before which it was revealed that the economy grew by 0.1% in this year's first quarter. It is worth recalling that on May 2, Germany, Europe's largest economy, confirmed it had fallen into recession.
The energy crisis, which was born out of sanctions on Russia, Europe's gas lifeline had spiraled into a cost-of-living crisis with inflation plaguing the Euro economies.
Euro area #GDP -0.1% in Q1 2023, +1.0% compared with Q1 2022 https://t.co/CybdBFvQxH pic.twitter.com/jkkFXaUBaC
— EU_Eurostat (@EU_Eurostat) June 8, 2023
According to the data, countries that recorded the highest GDP increase include Poland (+3.8%) in comparison to the previous quarter. Luxembourg recorded a 2.0% increase and Portugal recorded a 1.6% increase.
Those who recorded the highest decrease include Ireland with a 4.6% decrease, Lithuania with a 2.1% decrease, and the Netherlands with 0.7%.
Employment continued to increase in the Eurozone by 0.6% in the first quarter of 2024, up from 0.3% in the previous quarter.
"Based on seasonally adjusted figures, Eurostat estimates that in the first quarter of 2023, 216.1 million people were employed in the EU, of which 168.2 million were in the euro area," Eurostat said in its latest report.
Read more: UK going into recession in less than two years: Former US Treasury Sec
Predictions of a recession in the Eurozone go back as far as the first months which followed the start of the conflict in Ukraine. However, in November 2022, the EU Commission published a report titled 'Autumn 2022 Economic Forecast: The EU Economy at a turning point, where it projected a recession nearing ahead.
"High energy price pressures, erosion of households' purchasing power, a weaker external environment, and tighter financing conditions are expected to tip the EU, the euro area, and most Member States into recession in the last quarter of the year," the commission report said.
"As inflation keeps cutting into households' disposable incomes, the contraction of economic activity is set to continue in the first quarter of 2023. Growth is expected to return to Europe in spring, as inflation gradually relaxes its grip on the economy. However, with powerful headwinds still holding back demand, economic activity is set to be subdued, with GDP growth reaching 0.3% in 2023 as a whole in both the EU and the euro area," it added.
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