Europe’s economy failed to expand at the end of 2023 amid higher energy prices, costlier credit and a downturn in former powerhouse Germany.
Zero economic growth for the October-to-December period of last year follows a 0.1% contraction in the three months before that, according to figures released Tuesday by EU statistics agency Eurostat.
That extends a miserable run of economic blahs: The 20 countries that use the euro currency have not shown significant growth since the third quarter of 2022, when the economy grew 0.5%.
And the start of this year looks no better, with indicators of business activity still flashing red for contraction. Plus, disruptions to shipping in the Red Sea have constricted global trade through the Suez Canal, a major route between Asia and Europe, surging shipping costs and threatening to boost inflation.
The new figures underlined the growing divide between Europe and the United States, whose economy grew 0.8% in the fourth quarter compared with the previous three-month period, or an annual pace of 3.3% – better than expected.
The eurozone grew 0.5% for the full year, while the U.S. grew 2.5%. The International Monetary Fund on Tuesday upgraded its outlook for the world economy this year, envisioning global growth of 3.1% led by the U.S. but downgrading expectations for the eurozone to a meager 0.9% expansion.
The big picture is that eurozone GDP has been flat since the third quarter of 2022 when gas prices surged and the ECB started raising interest rates,” Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said in a written analysis.
