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HomeLatest NewsThe Eurozone stagnates until March with increasing pressure from rates and prices

The Eurozone stagnates until March with increasing pressure from rates and prices

Date: February 26, 2024 Time: 20:25:40

The pressure of rising interest rates and inflation that does not quite subside prevents the Eurozone from emerging from economic stagnation. The set of countries that share a currency grew a slight 0.1% in the first quarter of the year, compared to the 0.1% drop that occurred between October and December. The fact that the European Central Bank (ECB) has had to go ahead with rate hikes to stop a price spiral, together with the uncertainty caused by the financial turmoil -which has a negative impact on credit- and by the war in Ukraine is a brake on activity in the region.

In April, inflation broke with six months of falls and rose one tenth to 7%, driven above all by the price of food (processed foods shot up 14.7%), which have taken over the energy and are the element that exerts the most pressure on the shopping cart. At the same time, the core, which excludes its calculation of the price of fresh food and energy, remains at 5.6%, which is why it moderates very gently and remains close to its highs. It is a level that indicates more structural pressures and that forces the ECB to continue with the tightening of monetary policy, so financing will continue to become more expensive.

The European Commission already appeared on Monday that inflation will remain high this year both in the Eurozone and in the Union. In its new macroeconomic forecasts, the agency suggests that the general CPI rate will moderate at a slower rate than it forecast just a few months ago, last February. Thus, it places it in those years at 5.8% on average and at 2.8% the next, levels two and three tenths higher, respectively, than what it had calculated in its previous projections. The positive part is that the containment of energy prices has allowed the Community Executive to raise its growth forecast for the Eurozone by two tenths to 1.1% this year and to 1.6% next year (by one tenth). .

In year-on-year terms, the euro area economy advanced 1.3% in the first quarter. In the case of the European Union at Twenty-seven, the second estimate of the data published this Tuesday by Eurostat reveals that GDP increased by 0.2% in January and March, when it also contracted by 0.1% in the last quarter from the past exercise. In relation to the same period a year ago, activity as a whole grew by 1.2%.

Spain leads growth in the EU

Among the European Union countries for which disaggregated data were available, Poland (+3.9%), Portugal (+1.6%) and Finland (+1.1%) registered the highest year-on-year growth in GDP. Meanwhile, Lithuania (-3%), Ireland (-2.7%) and the Netherlands (-0.7%) were on the opposite side. If the main economies of the continent are taken as a reference, between January and March and in quarterly terms Italy and Spain grew by 0.5%, France had an advance of 0.2%, while German wealth stagnated.

If the comparison is made with the same one a year ago, Spain led growth throughout the European Union with an advance of 3.8%, followed by Romania (+2.8%) and Portugal (+2.5%). . The most severe contractions in activity occurred, however, in Lithuania (-3.6%) and Hungary (-1.1%), two economies that until now were highly dependent on Russia, as well as in the Czech Republic (-0 .2%) and Germany (-0.1%).

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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