Eurozone likely in recession – ECB

The single-currency bloc suffered an economic contraction in the third quarter of 2023, according to the central bank

The Eurozone probably failed to grow at the end of last year early indicators suggest, European Central Bank’s (ECB) Vice-President Luis de Guindos has stated.

In comments at a conference in Madrid on Wednesday, de Guindos highlighted that economic activity has continued to show clear weakness.

“Soft indicators point to an economic contraction in December too, confirming the possibility of a technical recession,” he stated. A technical recession is usually defined as two consecutive quarters of decline in GDP.

According to de Guindos, growth was “disappointing” and “the slowdown in activity appears to be broad-based, with construction and manufacturing being particularly affected.” The ECB vice-president noted that “services are also set to soften in the coming months as a result of weaker activity in the rest of the economy.” 

The ECB also pointed to weak prospects for the near term, saying the rapid pace of disinflation seen last year was likely to “slow down in 2024 and to pause temporarily at the beginning of the year.” 

Statistics show consumer price growth in the 20-member bloc picked up from 2.4% in November to 2.9% in December. However, price growth is expected to slow down in the coming quarters.

READ MORE: Eurozone economy faces bleak 2024 – FT

The latest data compiled by S&P Global has shown that business activity in the Eurozone continued to contract at the end of 2023, as a downturn in the dominant services industry stretched into the final month of the year. The data shows that the Eurozone saw a contraction of 0.1% in the third quarter of 2023, and likely shrank again last quarter, having met the technical definition of a recession.

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