Eurozone Sinks into Recession as Cost of Living Crisis Takes Toll
- June, 09, 2023 - 11:56
- Other Media news
TEHRAN (Tasnim) - The eurozone slipped into recession in the first three months of 2023, after official figures were revised to show the bloc’s economy shrank as the rising cost of living weighed on consumer spending.
Figures from Eurostat, the EU’s statistical agency, showed gross domestic product (GDP) fell by 0.1% in the first quarter of 2023 and the final three months of 2022 after revisions to earlier estimates. A technical recession is generally defined as two consecutive quarters of negative growth.
Previous estimates suggested the single-currency bloc had narrowly avoided recession with zero growth in both quarters.
The updated figures showed the wider EU swerved a recession after GDP rose by 0.1% in the first three months of the year, after a contraction of 0.2% in the final quarter of 2022.
The GDP volumes in the eurozone and the EU are more than 2% higher than the level recorded in the final quarter of 2019 before the COVID pandemic struck – unlike in the UK, where the economy remains 0.5% smaller, The Guardian reported.
Households across the eurozone have come under pressure from rising living costs after the Russian invasion of Ukraine triggered a sharp increase in gas prices, fueling the highest rates of inflation since the foundation of the single-currency bloc.
With consumers under pressure from the higher energy and food prices, household final consumption dragged down GDP across the euro area by 0.1 percentage points, after a larger 1 percentage-point drop in the previous quarter.
Several eurozone economies were in recession or came close to recording two consecutive quarters of decline, including Germany, the EU’s largest economy. France recorded close to zero growth, with flatlining growth in the fourth quarter and a modest increase of 0.2% in the first three months of 2023.