Eurozone growth slows in Q4, as expected

Economic growth in the eurozone slowed in the final quarter of last year, according to final data released on Tuesday by Eurostat.

GDP expanded by 0.1% on the quarter, down from 0.3% in the third quarter, but in line with the initial estimate and consensus expectations.

On the year, growth slowed to 1.9% in Q4 from 2.4% in the previous quarter, also in line with the initial estimate.

Separate data released by Eurostat showed that employment in the bloc was up 1.5% year-over-year in the fourth quarter, down from 1.8% in the third. On a quarterly basis, employment rose 0.4% following a 0.3% jump in Q3.

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: "Today’s data confirms that the eurozone economy managed to eke out some growth in Q4, just.

"This report offers little news otherwise; the component details won’t be available until the third estimate, due in early March. But monthly hard data and advance national GDP breakdowns suggest domestic demand was a drag on growth while net trade provided a boost to output."

"GDP fell in the countries most exposed to Russian energy and which were not exempt from the EU oil embargoes last quarter; this includes Germany, Italy, Austria, Poland and Finland. But this was more than offset by increases in Ireland, Spain, the Netherlands and France. Without revisions, full year EZ GDP growth was 3.5% in 2022."

She said economic growth will slow sharply this year to 1%, "we think".

"This is based on our forecasts for GDP to fall this quarter, by 0.2% quarter-on-quarter - as still-high inflation and higher interest rates continue to weigh on household spending and tighter lending standards lead firms to shelve investment plans - before rebounding from Q2, to average 0.4% until the end of the year."