The economy of the Eurozone remained steady in the fourth quarter, avoiding a potential technical recession due to improved growth in some southern European countries, most notably Spain and Italy. According to a preliminary flash estimate from Eurostat, Gross Domestic Product (GDP) maintained its previous status without any decline, whereas it shrank by 0.1 percent in the third quarter.
Economists had previously forecasted another drop of 0.1 percent in the fourth quarter, which would have declared the region's economic system in recession. However, the GDP showed a slight gain of 0.1 percent year-on-year, contrasting the prediction of nil growth similar to the third quarter.
Eurostat's next quarterly estimates are anticipated to be released on February 14. Meanwhile, the first estimate for 2023 indicated a 0.5 percent advancement in GDP.
Jack Allen-Reynolds, an economist at Capital Economics, predicted that the economy would maintain its level in the first half of the year due to the residual impact of past monetary restrictions and an increasingly stringent fiscal policy. Therefore, economists expect a substantial improvement in the Eurozone economy to occur much later in the year.
Germany, which had previously experienced no change in the two preceding quarters, saw a contraction in its economy by 0.3 percent in the fourth quarter. This was largely due to a significant decrease in gross fixed capital formation in the sectors of construction and machinery and equipment.
Meanwhile, the ifo Institute predicts a further 0.2 percent reduction in Germany's economic output in the first quarter, indicating a potential recession. France, on the other hand, demonstrated no change in the fourth quarter as any improvements in foreign trade were counterbalanced by a decrease in capital expenditure and consumer spending.
In contrast to these nations, Spain displayed an unexpected boost with an increased expansion of 0.6 percent, higher than the anticipated 0.4 percent. Similarly, the Italian economy outperformed expectations during the same period, as growth doubled to 0.2 percent from 0.1 percent. The economy of Portugal, another southern European country, also expanded by 0.8 percent sequentially after previously experiencing a 0.2 percent decline.
Finally, Austria's economy showed signs of recovery as it emerged from recession, primarily because of resilience in the industrial sector. The country's GDP rose by 0.2 percent, a significant improvement compared to the 0.5 percent decrease seen in the preceding quarter.
