The euro area’s economy has now shrunk for two quarters in a row.
Eurostat, a data group, said Thursday that the Eurozone’s economy shrank in the first quarter of 2023. This is the second quarter in a row that the economy has shrunk. This is the technical meaning of a recession.
The news came after the growth rates for the last quarter of 2022 and the first quarter of this year in the 20 countries that use the euro as their currency were cut.
Eurostat said in a statement that the Eurozone’s GDP fell by 0.1% between January and March 2022 compared to the fourth quarter of 2022.
The agency said that the downturn was caused by a drop in government and private spending, as well as new data from Germany showing that the country with the biggest economy in the Eurozone went into recession at the start of the year.
The study said that consumer spending in the euro area fell by 0.3% in the first quarter. This shows how hard it is on consumers as prices go up.
Bloomberg’s Maeva Cousin and David Powell said, “We expect growth to start again in the second quarter of 2023, but it will stay slow through 2023 because of headwinds from tighter financing conditions and weakening global demand.”
Eurostat figures showed that Ireland’s GDP dropped by 4.6%, Lithuania’s dropped by 2.1%, and Germany’s dropped by 0.3% in the last quarter.
In the first three months of the year, the Netherlands, Malta, and Greece also saw their economies shrink from one quarter to the next.
“The fact that GDP did shrink in the first quarter means that the Eurozone is already in a technical recession.” We think the economy will shrink even more over the rest of this year,” said Andrew Kenningham, head economist for Europe at Capital Economics.
Even though European Central Bank officials said that a recession could be avoided even though inflation was at its highest level since the euro was adopted, the data were changed.