Shoppers at the Bauveau Market in Paris, France, earlier this year. The euro area economy contracted in the third quarter, raising the prospect of a recession.
Important Takeaways:
- Europe’s economy risks a recession after output falls in the third quarter
- The euro area economy risks falling into recession later this year after official data Tuesday showed that output shrank slightly in the third quarter.
- Gross domestic product across the 20 countries that use the euro fell 0.1% in the July-to-September quarter compared with the previous three months, according to an initial estimate published by Eurostat, the European Union’s statistics office.
- The dip follows a rise of only 0.2% in the April-to-June quarter and highlights the fine line between contraction and growth in the eurozone. GDP was stagnant in the final three months of 2022 and the first quarter of this year.
- “The big picture is that the eurozone is struggling. It has only grown by 0.1% over the past year, and the timeliest business surveys consistently point to activity declining at the start of [the fourth quarter],”
- Recent survey data shows that activity in the eurozone’s manufacturing and services sectors has been on a downward trajectory, with demand for goods and services set to weaken further.
- Even if the region avoids a recession, economists say a meaningful recovery is still some way off.
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