Thursday, June 8, 2023 7:37 AM EST
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The latest revisions of the GDP figure for the first quarter resulted in a 0.1% drop. That makes for a second decline in a row. These declines are so minimal that current economic circumstances are better described as broad stagnation
So, a technical recession after all. It just took the statistical offices a while to get there. The decline of 0.1% in both the fourth and first quarters is so minimal though, and the labor market is so strong that it’s hard to argue that this is a recessionary environment. The stagnation of the economy does mark a clear cut from the recent post-pandemic boom though.
The significant downward revision was mainly due to Germany revising its numbers as new data came in. This fuels the idea that March activity was very weak, making a quick rebound in the second quarter unlikely. With May survey data being weak across the board, it is likely that we only get a modest uptick after the two-quarters of downturn.
Overall, the eurozone economy is very much back to muddling through, as the monetary policy starts to weigh more heavily on activity, post-pandemic spending fades and the energy crisis looms.
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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...
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