The eurozone economy grew in the last quarter of 2022 despite economists’ forecasts for a slowdown, raising hopes that the region will avoid a recession.
A more benign climate and public aid cushioned the impact of the rise in energy prices, helping the region’s economy grow by 0.1% between the third and fourth quarters, according to official data published by Eurostat. .
The expansion was better than the 0.1% drop forecast by economists polled by Reuters. The same survey had forecast another quarter of contraction during the first three months of 2023.
Bert Colijn, chief economist at ING bank, said the region’s economy was showing “incredible resilience” in the face of the energy crisis triggered by Russia’s invasion of Ukraine.
With Tuesday’s data, the region managed to grow in all quarters of 2022 and 3.5% throughout the year.
John Leiper, chief investment officer at Titan Asset Management, called the numbers “quite an achievement” given the headwinds the region was facing.
Businesses and households also faced higher borrowing costsas the European Central Bank raised interest rates by 2.5 percentage points during the second half of last year to combat inflation that peaked at 10.6%.
Just a few months ago, economists had predicted a deep recession and energy shortages. But a less cold winter than feared, the drop in gas prices and generous public aid have helped to avoid this scenario.
The Eurostat figures are likely to figure into considerations from the ECB, which is trying to ensure inflation returns to its 2% target. Markets expect the ECB’s governing council to raise the benchmark deposit rate by 0.5 percentage point to 2.5% when it meets on Thursday.
The latest price data is also likely to strengthen the central bank’s resolve. In France, inflation accelerated in January, while in Spain core consumer price growth, excluding food and energy, reached the highest level ever recorded.