EU Economy Stagnated at the End of 2022; Eurozone on the Brink of Stagnation

Economic activity in the EU stagnated in the fourth quarter of 2022, while in the eurozone it grew by a modest 0.1 percent, slipping in both areas to the lowest level in two years, preliminary estimates from Eurostat showed on Tuesday.

Seasonally adjusted gross domestic product (GDP) of the EU was unchanged in the fourth quarter compared to the previous three months when it increased by 0.3 percent, calculated Eurostat. In the eurozone, it grew by 0.1 percent compared to the period from July to September when it also increased by 0.3 percent.

The stagnation of activity in both areas is the weakest result since the end of 2020 or the beginning of 2021, according to Eurostat’s report.

Compared to the fourth quarter of 2021, activity in the EU increased by 1.8 and in the eurozone by 1.9 percent.

In the third quarter, the economy at the EU level increased by 2.5 percent compared to the same period in 2021, and in the eurozone by 2.3 percent.

Major Economies Falter

Activity in leading European economies faltered at the end of 2022, with German GDP recording a decline in activity of 0.3 percent compared to the previous three months when it increased by 0.5 percent.

The French economy grew by 0.1 percent, half as weak as in the previous three months. The Italian economy, on the other hand, decreased by 0.1 percent compared to the period from July to September when it increased by 0.5 percent.

The Spanish economy grew by 0.2 percent, as it did in the previous three months.

Among the 12 member countries for which the European statistical office had data, Irish GDP saw the strongest growth, increasing by 3.5 percent.

Six members recorded a decline in GDP on a quarterly basis, with the largest being in Lithuania, where it decreased by 1.7 percent. Austria and Sweden followed with declines of 0.7 and 0.6 percent, respectively.

Surge in Ireland

On an annual basis, all countries for which Eurostat had data recorded growth in activity in the last three months of the previous year, except for Sweden and Lithuania, where it decreased by 0.6 and 0.4 percent, respectively. The strongest growth was recorded in Ireland, at 15.7 percent. Portugal followed with GDP growth of 3.1 percent, and Austria and Spain where it increased by 2.7 percent.

Spain recorded the strongest growth among the ‘large’ group. Italy is in second place with a growth rate of 1.7 percent, and Germany in third with 1.1 percent. The weakest growth in that group was in France, the second-largest economy in the eurozone, with only 0.5 percent growth compared to the same period in 2021, according to Eurostat data.