In the primary quarter, the German economy entered recession.
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The eurozone entered recession in the primary quarter of this 12 months, and economists will not be optimistic concerning the coming months.
The 20-member bloc recorded a gross domestic product of -0.1% in the primary quarter, in accordance with Eurostat’s revised estimates published on Thursday.
In its first reading, the agency said the eurozone had grown by 0.1% in the primary three months of the 12 months. This statement was revised after Germany also cut its growth figures for a similar period and effectively entered a recession. Ireland has also revised its growth rate downwards, which is now down by almost 5%.
Ahead of the weak January-March performance, the eurozone also contracted by 0.1% in the ultimate quarter of 2022. Two consecutive quarters of negative GDP performance also plunged the complete region right into a technical recession.
“The news of a decline in GDP in the primary quarter, nonetheless, signifies that the eurozone has already entered a technical recession. We suspect the economy will proceed to contract for the remainder of this 12 months,” Andrew Kenningham, chief European economist at Capital Economics, said in a Thursday note.
Ireland, the Netherlands, Germany and Greece are among the many euro area economies that experienced a quarter-on-quarter contraction in the primary quarter.
Household consumption fell by 0.3% in the primary quarter, highlighting the pressure consumers are facing attributable to higher prices.
Claus Vistesen of Pantheon Macroeconomics said in a note that the Eurozone region is unlikely to see much growth in the approaching months as he expects investment to slow.
The poor economic environment can also be difficult for the European Central Bank, which has been on a hawkish path for the last 12 months and recently set its key rate of interest at 3.25%. The central bank is attributable to meet next week and market players have priced in one other 25 basis point hike.
Poor economic performance could limit the ECB’s ability to lift rates further to fight inflation. Nonetheless, ECB officials had previously suggested that lowering prices was more necessary than avoiding an economic slowdown.
Eurozone bond yields continued to be much higher on Thursday after the information release as several market players expect further monetary tightening.