Eurozone avoids technical recession as flat Q4 GDP reading confirmed

The eurozone managed to avoid a technical recession in the final three months of last year as the bloc's stagnant GDP data was confirmed.

GDP grew 0% in the final quarter of 2023, in line with the flash reading, statistics office Eurostat said on Wednesday, which also confirmed that output fell 0.1% in the prior three months.

Two quarters of consecutive declines in output are usually counted as a technical recession.

Germany, which is the largest economy in Europe, contracted by 0.3% in the final quarter and France flatlined. Offsetting this was 0.2% growth in Italy, 0.6% in Spain, and a 0.8% reading from Portugal.

Contrasting the anaemic GDP figures, eurozone employment rose by 1.3% year-on-year in the final quarter, above forecasts of 1.1%. Further good news came with a 2.6% jump in industrial production, although this was skewed by a massive 44.5% jump in Ireland.

"Looking ahead for the economy, meanwhile, sustained weakness in the surveys is forcing us to maintain a cautious outlook for Q1 growth," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.

"Our baseline remains for GDP to flat-line. We still don’t have any hard data to back this up, and we stand ready to lift our forecast if we see positive numbers in January, in particular in retail sales."

"More generally, we still think that a rebound in real disposable income growth is now supporting a gradual rebound in consumers’ spending growth. This should start to pull GDP growth back above zero from Q2 onwards."

Reporting by Frank Prenesti for Sharecast.com