European Countries Face Recession
While 20 European countries that use the euro fell into a recession at the beginning of the year, the broader European economy avoided the downturn. Overall the European Union gross domestic product ticked up 0.1 percent in the first quarter after falling -.2 percent at the end of 2022.
High inflation curtailed consumer spending in the 20 countries, however, and their government tightened purse strings. Economic output in the eurozone dropped 0.1% compared with the previous quarter. In the fourth quarter of 2022, output also dipped 0.1%, the figures showed.
Normally, recession is defined as two consecutive quarters of economic contraction – in which production declines.
But it could have been worse, given the magnitude of the “shock” to incomes once they are adjusted for inflation, according to officials. Overall consumer prices in May were 6.1 percent higher than a year ago.
Both the eurozone and the whole of the EU are lagging the US economy. GDP in the US rose 0.3% in the first quarter after a 0.6% increase late last year, according to data from the Organization for Economic Co-operation and Development. The US grew its economy 1.3% in the January-March period compared with the previous quarter.
European analysts foresee another contraction in the second quarter as the effects of monetary policy continue to tighten.