The Euro zone economy grew by a marginal 0.1% in Q1 of 2023, as Germany's GDP remained stagnant over the period. Growth came in below expectations, with a Reuters poll of economists previously forecasting a Q1 growth rate of 0.2%. The annual economic growth was also at 1.3%, a hair under the projected 1.4%.
The low growth figures come in light of high inflation in Europe, with rising energy prices due to the war in Ukraine being a key driver of inflation, with Carsten Brzeski, global head of macro at ING stating that a bloc-wide recession being averted by a warmer than expected winter along with fiscal stimulus. He further went on to state that there exist significant disparities between individual countries, and that future growth relies heavily on a positive momentum in industry and wage growth, and the possibility of a US recession and a tightening of the monetary policy by the European central bank.
Germany's economy stagnated in the first quarter of 2023, avoiding a technical recession by a narrow margin, while France's GDP increased by 0.2% despite widespread strikes. Irish GDP declined by 2.7% on the previous quarter, while Portugal's economy grew by 1.6%. The European Central Bank (ECB) meeting on May 4th will closely scrutinize these figures as they seek to tackle headline inflation of 6.9% and core inflation at a record high of 5.7%. Some ECB policymakers have suggested a further interest rate rise may be necessary, but concerns remain about banking sector turmoil and deposit outflows.
Source: Euro zone economy ekes out 0.1% growth in first quarter (cnbc.com)
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