2024-01-30 11:58:00
Relief for growth in the euro zone. The gross domestic product (GDP) of the zone remained stable in the fourth quarter of 2023 compared to the previous quarter, following a decline of 0.1% from July to September, narrowly escaping a recession, according to data published Tuesday by Eurostat . Thus, the figure is higher than the forecasts of Bloomberg and Factset analysts who expected a decline in GDP of 0.1% over the period from October to December and an entry into technical recession, defined by two consecutive negative quarters.
Over the whole year, the 20 countries sharing the single currency recorded growth of 0.5% compared to 2022, points out the European Statistics Office. This is nevertheless a little less than the 0.6% anticipated in November by the European Commission in its latest forecasts.
High interest rates
The European economy suffered last year from high interest rates imposed by the European Central Bank (ECB) to calm record inflation. The contraction in credit weighed on investment and consumption by businesses and households alike, while exports suffered from the slowdown in global demand. As a result, the euro zone became mired in stagnation, with GDP growth oscillating around zero: +0.1% from January to March, +0.1% from April to June, then -0.1% and 0%, quarter-on-quarter. The figures were identical for the entire European Union.
Again last Thursday, the ECB decided to maintain its key rates, for the third time in a row since October. Thus, the deposit rate remains at 4%, the refinancing rate at 4.5% and that of the marginal lending facility at 4.75%. As a reminder, the monetary institution has increased rates ten times in an unprecedented manner. Consecutive increases since July 2022, started to combat inflation, accentuated by the rise in energy prices, following the invasion of Ukraine on February 24, 2022.
At the same time, the markets are betting on a rate cut as early as June, or even earlier for the most optimistic. An intuition which echoes the discourse of certain central bankers. Thus, during his wishes at the beginning of January, François Villeroy de Galhau, governor of the Bank of France and member of the Governing Council of the ECB estimated that the European monetary institution should begin to lower its interest rates in 2024, but without “obstinacy nor haste”.
Good students…
Despite this gloomy economic context, some countries have still fared better. This is particularly the case of Spain, driven by tourism. The country thus experienced growth of 2.5% last year. This figure, which confirms the dynamism of the Spanish economy, is slightly higher than the government’s forecast, which was betting on an increase in gross domestic product (GDP) of 2.4%. It also exceeds the expectations of the OECD and the Bank of Spain, which had revised their growth assumptions upwards to 2.3% this fall.
Spain benefits from a “ sustained growth “, of a level ” higher than that of our main European partners », Underlined Monday the Minister of Economy Carlos Cuerpo during a meeting with business leaders. A remarkable situation, “ given the current situation “, characterized by ” high levels of uncertainty, particularly geopolitically », added the minister.
For its part, France recorded growth of 0.9%, doing better than average. In detail, growth in gross domestic product remained sluggish from October to December, as in the first and third quarters (revised from +0.1 point to 0%), while the second was much more flamboyant, at 0.7% (also revised by +0.1 point).
Portugal is also doing well. The Iberian country thus displays annual growth of 2.3%, according to a first official estimate published on Tuesday. Over one year, economic activity increased by 2.2% in the fourth quarter of last year, following an increase of 1.9% between July and September, thanks to a recovery in exports, said the National Institute statistics (INE) in a press release. The Portuguese economy posted growth of 6.8% in 2022, the highest in 35 years.
…And bad ones
Conversely, other countries have experienced more difficulties. This is particularly the case for Germany, Europe’s largest economy. The country suffered a decline of 0.3% in 2023, weighed down by the crisis in the industrial sector which is suffering from energy costs. Exports are thus slowing down. “ After the German economy stagnated in the first three quarters, economic output declined in the fourth quarter of 2023 », summarized the National Statistics Office Destatis.
An exporting power, the country suffers from weak external demand, energy costs for its manufacturing sector and interest rates raised by the European Central Bank. After this poor end-of-year result, the start of 2024 is therefore worrying.
Italy thus finds itself penalized by the distress of Germany, its main trading partner. The growth of the peninsula will have been slightly lower than that of France, which recorded an increase in GDP of 0.9% over the year 2023. The country can however count on funds from the European recovery plan, of which it is the first beneficiary with an amount of 194.4 billion euros by 2026. Even if Rome has already pocketed more than half of this financial windfall, supposed to revive economic activity following the ravages of the coronavirus pandemic.
After these mixed results, the Commission must publish its growth forecasts for 2024 on February 15. It had so far expected GDP to increase by 1.2% for the euro zone but the European Commissioner for the Economy Paolo Gentiloni warned in January that geopolitical tensions in the Middle East increased the risks of a downward revision of the outlook.
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