The European market registered a gross domestic product (GDP) growth of 0.0 percent in Q1 2023 as compared to Q4 2022.
Markets displayed resilience during the first quarter despite the European economy being cut off from Russian oil and gas supplies following the invasion of Ukraine. However, the EU market was weighed down by rising inflation amid bank deposit flight, similar to the United States banking crisis. Nonetheless, to fight high core inflation, the European Central Bank has continued to raise interest rates, with an increase of 50 basis points in the most recent update.
Notably, some ECB policymakers are working on raising interest rates further by around 25 basis points next week, which could push the key interest rate above 3 percent. The euro zone is currently grappling with inflation at 6.9 percent and core inflation at around 5.7 percent.
European Market Economic Outlook
The euro zone economy grew 0.1 percent during the first quarter, according to preliminary data released on Friday. The EU bloc missed analysts’ forecasts in the first quarter, which had expected 0.2 percent, according to a poll by Reuters. Still, the European economy grew by about 1.3 percent on an annual basis but still missed analysts’ expectations of 1.4 percent.
according to a report by destatis, the European market registered a gross domestic product (GDP) growth of 0.0 percent in the first quarter of 2023 compared to the fourth quarter of 2022. The government pegged a fall in the eurozone as early as 2023. Reportedly, positive contribution came from capital formation and exports in the European market during the first quarter.
Earlier this month, data from Eurostat projected no growth for the eurozone in fourth quarter 2022 to 0.1 percent quarterly growth after a 0.4 percent increase during the third quarter of last year.
European markets were able to avoid a much-anticipated recession during the first quarter of 2023. Falling wholesale energy prices, warmer-than-expected weather and fiscal stimulus helped European markets dodge a widely feared recession during the winter, according to Carsten Brzeski, global head of macro at Dutch bank ING.
Still, Brzeski indicated that data from individual countries would be important to the bloc’s future growth prospects. Moreover, the ongoing race between positive momentum in European countries and wage growth on the one hand has prompted the ECB to pursue monetary tightening policies.
As a result, EU regulators may consider diversifying major economies such as Germany and France in the second half of 2023 amid fears of a recession in the United States.
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