The EU and Eurozone Economy Slowed Sharply in the Third Quarter

The EU and Eurozone economy slowed sharply in the third quarter amid high energy prices and increased borrowing costs, the first estimate from the European statistics office showed on Monday.

Seasonally adjusted Gross Domestic Product (GDP) in the EU and Eurozone increased by 0.2 percent in the third quarter compared to the previous three months, statisticians calculated. In the second quarter, it had increased by 0.7 percent in the EU and by 0.8 percent in the area of the common European currency.

On an annual basis, GDP in the EU increased by 2.4 percent in the third quarter, following a 4.3 percent growth from April to June. In the Eurozone, it increased by 2.1 percent, half as much as in the spring quarter, Eurostat’s calculations show.

Solid Growth in Sweden

Among the 10 member countries for which the European statistics office had data, GDP in Sweden grew the most in the third quarter on a quarterly basis, by 0.7 percent. This was followed by Italy with an activity growth of 0.5 percent, and Portugal and Lithuania where it increased by 0.4 percent.

Three members recorded a decline in GDP on a quarterly basis, with the largest drop in Latvia, where it plummeted by 1.7 percent. Austria and Belgium followed with a decline in activity of 0.1 percent.

Data for the Czech Republic is marked as confidential until November 1.

Decline in Latvia

On an annual basis, economic activity in all 10 member countries for which Eurostat had data recorded growth in the third quarter, except for Latvia where it decreased by 0.4 percent.

The highest growth was recorded in Portugal and Spain, by 4.9 and 3.8 percent respectively. Sweden and Italy followed with an activity growth of 2.5 percent.

High energy costs, which surged after Russia reduced gas supplies due to sanctions imposed by Western countries in response to the Russian invasion of Ukraine, hampered economic activity this summer.

At the very end of the quarter, the Nord Stream 1 pipeline was damaged in explosions whose cause Western countries are still investigating, suspecting sabotage. Russia is not involved in the investigation.

The economy is also hindered by increased interest rates in the US and Eurozone, which the US and European Central Bank (ECB) are trying to curb high inflation.