The euro area economy contracted slightly in the third quarter of 2023 as inventory levels fell more than expected
advertisementThe euro area economy contracted slightly in the third quarter of 2023 due to changes in inventory levels and deteriorating business confidence.
The third forecast for euro area gross domestic product (GDP) growth for the third quarter of 2023 was released on Thursday morning and came in at -0.1%. This was lower than the 0.1% in the second quarter, but in line with analyst expectations.
The third forecast for euro area GDP year-on-year was also 0%, a significant downward revision from 0.6% for Q3 2022 and 0.1% expected by analysts.
This was the first GDP decline since the last quarter of 2022, and was further influenced by fixed spending remaining roughly flat. Exports decreased by 1.1%, and imports also decreased by 1.2%. However, household spending increased, with consumption increasing by 0.3%. Public spending also increased by 0.3%, slightly up from 0.2% in the previous quarter.
Malta had the highest GDP growth from the second quarter at 2.4%, followed by Poland at 1.5% and Cyprus at 1.1%. The worst recession was in Ireland -1.9%, followed by Estonia -1.3% and Finland -0.9%.
Italy's economy grew by 0.1%, while Spain's expanded by 0.3%. However, the French economy decreased by -0.1%, and Germany's economy also decreased by -0.1%. The Netherlands also experienced negative growth of -0.2% in the third quarter of 2023.
Ahead of the Eurozone GDP announcement, EUR/USD rose 0.08% to around JPY 1,0770, but this rally may be short-lived, especially as economic growth in the Eurozone increases demand for the USD. There is. The data was weaker than expected.
Employment increases in the euro area and the EU
However, employment in both the euro area and the EU increased by 0.2%, compared with 0.1% in the previous quarter.
Lithuania and Malta both had the highest employment growth rates at 1.4%, followed by Spain at 1.3%. Estonia had the largest employment decline of -0.9%, followed by the Czech Republic with -0.7% and Finland with -0.6%.
However, future trends in inflation, the reaction of the European Central Bank (ECB) and future interest rate decisions will be crucial in determining the GDP numbers for the final quarter of the year.
ECB governors such as Isabel Schnabel have been insistent that the central bank needs to keep further interest rate hikes an option in case inflation does not return to its 2% target quickly enough. However, this hawkish stance is very likely to change soon, as inflation reports have declined slightly over the past few rounds.
S&P Global also emphasized that the eurozone economy is heading for a soft landing next year, and if this downward trend in inflation continues, the ECB could start cutting interest rates sooner than expected. may mean.
