Eurozone on the verge of recession as the economy contracts by 0.1%

Posted on November 3, 2023   |  

The eurozone, a group of 20 countries, has been grappling with economic challenges.

Over the past year, it has seen minimal growth, only 0.1%, and encountered economic declines in 3 out of the last 4 quarters.

Despite a drop in the annual inflation rate in the eurozone from 4.3% in September to 2.9% in October.

There is a potential risk of a recession, which occurs when there are 2 consecutive quarters of economic decline.

Several factors contribute to these economic struggles, including the European Central Bank's decision to raise interest rates, reduced consumer spending due to inflation, and weaker exports due to a slower global economy.

In the larger European Union, the economy experienced modest growth of 0.1% in Q3, compared to the same period in 2022.

Among the 4 largest economies in the eurozone, Germany's economy shrank by 0.1%, France saw a 0.1% growth, Italy remained stable, and Spain's economy expanded by 0.3%. 

On the other hand, Ireland had the most significant economic decline at -1.8%, while Latvia and Belgium showed the strongest growth at +0.6% and +0.5%, respectively. 

Excluding Ireland's decline, the eurozone's overall GDP remained unchanged.

The decrease in the eurozone's annual inflation rate was mainly due to fluctuations in food and energy prices. 

Core inflation, which excludes food and energy, decreased from 4.5% to 4.2%.