The European Union officially entered a recession in the fourth quarter of 2023, as confirmed by Eurostat. Despite initial estimates suggesting stagnation, revised data now confirms the recession in the euro zone. Latvia, Portugal, Lithuania, and Finland were among the countries that contributed to the downward revision in GDP growth.
The four major euro economies saw mixed results, with Germany contracting, France and Italy seeing marginal growth, and Spain accelerating its growth. Analysts attribute the slower growth in the euro zone to various factors such as deteriorating household purchasing power, monetary adjustments, reduced fiscal aid, decreased external demand, lower business investment and consumer confidence.
The International Monetary Fund and the European Commission expect modest growth for the region in 2024. However, factors like ongoing geopolitical tensions and uncertainty about energy prices add further complexity to the economic outlook. Despite this challenges, there is hope for a gradual revival in the economy in the second half of 2024 supported by easing inflationary pressures and increased consumer spending. Additionally measures like interest rate cuts and European funds are expected to stimulate economic recovery.