Eurozone escapes recession as the German economy shrinks

Posted on February 5, 2024   |  

The 20-nation Eurozone narrowly avoided a recession as its economy remained flat at the end of 2023.

There was zero growth in the single currency zone in the final quarter, following a 0.1% economic contraction in the third quarter, preventing a consecutive contraction.

Germany, the largest economy, contracted by 0.3%, and France saw no growth for a second successive quarter, contributing to overall economic challenges.

Italy, initially expected to stagnate, surprisingly recorded a growth of 0.2%, while Spain expanded by 0.6%, exceeding the forecast of 0.2%.

Among smaller eurozone economies, Portugal grew by 0.8%, Austria expanded by 0.2%, and Ireland's economy contracted by 0.7%, marking its fourth successive quarterly fall in 2023.

The broader 27-nation European Union also posted no growth in the fourth quarter. 

From the fourth quarter of 2022 to the final quarter of 2023, the eurozone expanded by just 0.1%, while the EU grew by 0.2%.

The stagnant eurozone economy increases pressure on the European Central Bank to consider cutting borrowing costs.