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The fall in consumption leads the Eurozone to recession and questions the toughness of the ECB

Date: February 26, 2024 Time: 19:48:01

The Eurozone economy officially entered a technical recession between March and March, registering two consecutive Januarys of decline. The region’s GDP contracted again by 0.1% in relation to the quarter, dragged down by the drop in demand, both private and public, in a context of increasing financial costs and in which inflation barely gives households a break . The European Central Bank (ECB) has been seeking to cool the area’s economy with the fastest rate rise since the euro existed, and has made it clear that it will maintain these increases, understanding that the underlying rate (which excludes its calculation of energy and fresh food and points to more structural tensions in prices) has not yet peaked.

From January to March, household final consumption spending fell by 0.3% in the euro zone and subtracted one tenth from GDP; meanwhile, final consumption spending by Public Administrations had 1.6% -despite the use of Next Generation funds- and subtracted another three tenths from growth. The data released this Thursday by Eurostat, the European statistics office, point to a drop in exports of 0.1% and a much larger drop in exports, of 1.3%, amid the general slowdown in the activity.

The drop of 0.1% of GDP means that Eurostat has revised its initial estimate downward by two tenths, which it published in May and pointed to a very moderate increase of 0.1%. It is the first time that the euro area economy has entered a recession since the earthquake caused by the Covid pandemic and the stoppage of activity and restrictions approved to deal with it. In year-on-year terms, comparing the first quarter of this year with the same in 2022, activity increased by 1% among the twenty countries that share the euro.

The European Union if it manages to avoid the recession

Taking into account the seasonally adjusted figures (excluding calendar effects), the volume of GDP in the Eurozone was 2.2% higher than that registered at the end of 2019, before the health crisis broke out. In the case of the European Union, the Twenty-seven as a whole did manage to avoid the recession at the beginning of the year, since the block advanced by 0.1% after its GDP contracted by 0.2% between October and December. In relation to the same quarter of the previous year, the EU also advanced by 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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