The eurozone bucked expectations to post a small rise in GDP for the fourth quarter, despite being buffeted by economic headwinds from inflation, energy prices and the Ukraine war. Photo by symbiot/Shutterstock
Jan. 31 (UPI) — The Eurozone remained in the black in the fourth quarter, eking out a slight, but unexpected, rise in gross domestic product, the European Union announced Tuesday.
The 0.1% GDP rise — down from 0.3% in the third quarter — came despite the fact almost a third of the economies of the 19 countries that use the euro, including, Germany, shrank, preliminary figures from Eurostat, the EU’s statistics office, show.
But growth was up 1.9% compared with the fourth quarter of 2021. The figures exclude Croatia, which only joined the zone on Jan. 1.
Growth in the EU as a whole, which comprises 27 countries, flatlined at 0%, down from 0.3% in the third quarter. However, growth was up 1.8% on the fourth quarter of 2021.
Eurostat’s growth numbers coincided with the International Monetary Fund’s latest forecast for the global economy showing a five-fold drop in economic growth in the eurozone from an estimated 3.5% in 2022 to just 0.7% this year.
The IMF blamed inflation and the war in Ukraine for a global slowdown it forecasts for this year with growth almost a full percentage point below the historical (2000-19) average of 3.8%.
The balance of risks remain tilted to the downside, but with growth bottoming out and adverse risks, including inflation, moderating in recent months, the global economy could be at a turning point, the IMF said.
”Economic growth proved surprisingly resilient in the third quarter of last year, with strong labor markets, robust household consumption and business investment, and better-than-expected adaptation to the energy crisis in Europe,” said IMF research director Pierre-Olivier Gourinchas.
”Inflation, too, showed improvement, with overall measures now decreasing in most countries — even if core inflation, which excludes more volatile energy and food prices, has yet to peak in many countries.”
Eurostat inflation numbers out earlier this month showed eurozone inflation dropped to under double digits for the first time in three months and its lowest level since August, giving Europeans a small dose of economic relief at the end of 2022.
Eurostat said the inflation rate for December was 9.2% compared to 2021, dropping from 10.1% in November and 10.6% in October. It was the lowest inflation group since August, when inflation came in at 9.1%.
The eurozone has faced mounting economic pressure since Russia’s invasion of Ukraine 11 months ago. Many member states have participated in economic sanctions against Russia, with the Kremlin retaliating by shutting off gas pipelines and restricting the energy supplies it sends to Europe overall.
Those moves created shortages that sent energy prices skyrocketing.