London: The Eurozone has fallen into recession, new data show, as its economy contracted over the winter, according to a media report.
GDP across the Euro area shrank by 0.1 per cent in the first quarter of this year, downgraded from a previous estimate that the economy stagnated, The Guardian reported.
This follows a 0.1 per cent contraction in GDP in the fourth quarter of last year, meaning the 20-nation economy has shrunk for two quarters in a row – the standard definition of a recession, the report said.
It was dragged down by Ireland, where GDP fell by 4.6 per cent in the first quarter of this year – although economists have questioned whether that really reflects the performance of the Irish economy.
Lithuania’s economy shrank by 2.1 per cent, while the Netherlands contracted by 0.7 per cent. Germany, Europe’s largest economy, shrank by 0.3 per cent and is also in recession.
Europe’s economy has been hit by the economic disruption caused by the Ukraine war, which has pushed up energy and food prices.
That had prompted a series of interest rate hikes, as the European Central Bank tried to battle higher inflation, The Guardian reported.
Household final consumption expenditure decreased by 0.3 per cent in the Euro area during the first three months of this year, following a 1 per cent drop in the fourth quarter of 2022.
Government final consumption expenditure (which tracks government spending on goods and services) decreased by 1.6 per cent in the Euro area in January-March, The Guardian reported.
Gross fixed capital formation, which tracks investment, increased by 0.6 per cent in Q1.
But trade deteriorated. Exports decreased by 0.1 per cent in the Euro area while imports dropped by 1.3 per cent, showing that demand was hit by the cost of living squeeze.