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Euro zone economy posts surprise expansion in the fourth quarter, curbing recession fears

31.01.23 14:26
The euro zone beat expectations on Tuesday by posting positive growth in the final quarter of 2022 and reducing fears of a potential regional recession.

Preliminary Eurostat data released Tuesday showed that the euro zone grew 0.1% in the fourth quarter. Economists had pointed to a 0.1% contraction over the same period, according to Reuters.

The latest figures come after the euro area posted a 0.3% GDP increase for the third quarter of last year.

The region has been under significant pressure in the wake of Russia’s invasion of Ukraine, as high food and energy costs compounded long-standing supply chain bottlenecks. Last year, economists warned that the 20-member region could be about to enter an economic recession.

Energy prices cooled off in the latter part of 2022, bringing some relief to the euro zone’s broader economic performance.

However, Germany surprised to the downside at a country breakdown level. The biggest European economy contracted by 0.2% in the last quarter of 2022, with analysts now expecting Berlin will head into a recession.

“Germany has likely entered a shallow and short recession in the fourth quarter that will last through the first quarter before the economy stabilises in the second quarter (of this year),” Salomon Fiedler, economist at Berenberg, said in a note Monday, CNBC reports.