Euro Area: The economy defies recession in Q4

Euro Area GDP Q4 2022

Euro Area: The economy defies recession in Q4

The economy grew 0.1% in seasonally adjusted quarter-on-quarter terms in Q4, below Q3’s 0.3% expansion but surprising markets on the upside. Compared with Q4 2021, seasonally adjusted annual GDP increased 1.9% in Q4, following the 2.4% rise recorded in the previous quarter.

The quarterly deceleration came on the back of soaring inflation, rising interest rates and souring business and consumer sentiment amid a worsening global economic outlook and the prolongation of the war in Ukraine. In terms of individual countries, Spain’s economy grew 0.2% over the previous quarter in Q4, France’s economy expanded 0.1%, Italy’s GDP dipped 0.1% and Germany’s GDP decreased 0.2%.

Commenting on the outlook, Bert Colijn, senior Eurozone economist at ING, stated:

“While underlying data has not yet been published for eurozone GDP, data from the individual countries paints a picture of contracting domestic demand. […] Doubts about continued strong net export growth are also justified in a weak global environment, and investment is set to come under pressure from higher interest rates as borrowing data suggests. This means that an economy performing sluggishly, at best, is expected for early 2023 and a dip below zero cannot be ruled out for the first quarter.”

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