According to Eurostat\u2019s revised economic data released on June 8, the eurozone\u2019s gross domestic product (GDP) shrank by 0.1% month-over-month in each of the first three months of 2023. Having already declined in the last quarter of 2022, the eurozone\u2019s economy officially slipped into recession, as this results in a Q1 GDP drop of 0.4%.<\/p>\n
The eurozone fell into a mild recession after the latest data by Eurostat published on Thursday showed how GDP fell by 0.1% quarter-over-quarter in the first three months of 2023, after already dropping by the same margin in the prior three-month period. On an annual basis, the GDP of countries that use the euro as their official currency slipped by 0.4%, after previously declining in the final quarter of 2022.<\/p>\n
While the eurozone was tipped into recession primarily due to elevated energy and food costs triggered by Russia\u2019s invasion of Ukraine, negative economic data stemming from Germany and Ireland also played a major role. Specifically, in its initial GDP report, Eurostat estimated that the eurozone\u2019s economy saw slight growth in Q1, however, a recession in Germany and a steep drop in Ireland\u2019s factory output neutralized that expansion in other economies in the area.<\/p>\n
As a result, Eurostat\u2019s revised figures showed that the eurozone\u2019s economy shrank for two consecutive quarters, which is in line with the formal definition of an economic recession. Meanwhile, economists believe the economy will witness growth in the quarter through June as declining energy costs relieve the pressure on local households. Still, experts expect the eurozone economy to grow just 0.9% in 2023.<\/p>\n
Even though energy expenses have declined considerably from their 2022 highs, inflation in the euro area is easing at a slow pace due to resilient food prices, limiting local consumers\u2019 spending power. Since peaking at 10.6% in 2022, eurozone inflation fell to 6.1% in May 2023, though it still remains significantly higher than the European Central Bank\u2019s (ECB) target of 3.2%, despite a series of interest rate hikes, which began in July last year.<\/p>\n
\u201cA peak in underlying inflation wouldn\u2019t be sufficient to declare victory: we need to see convincing evidence that inflation returns to our 2% target in a sustained and timely manner. We aren\u2019t at that point yet.\u201d<\/p>\n
\u2013 ECB policymaker Isabel Schnabel<\/cite><\/p>\n Elsewhere, inflation in the US fell to 4.9% in May, after reaching a 4-decade high of 9.1% last year. The report marked the 10th consecutive month the annual inflation rate in the US has declined, but prices are still advancing at a rate that is substantially higher than the Federal Reserve\u2019s target rate of 2% a year.<\/p>\n This article originally appeared on The Tokenist<\/i><\/p>\n Sponsored: Tips for Investing<\/b><\/p>\n A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.<\/p>\n Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses,\tconsider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.<\/p>\n