GDP remains stable despite weak European economy

(CN) — With a year-over-year increase of just 0.1%, gross domestic product in the eurozone remained stable in the fourth quarter of 2023 after retreating slightly in the third quarter, according to data released Friday by Eurostat, a statistics agency of the European Union.

Europe’s GDP has remained relatively flat since fluctuations caused by Covid-19 eased in 2022. That year, GDP was up 3.4% — but for the year 2023, it was measured at just 0.4%. Comparatively, GDP in the United States saw a 0.8% increase in the fourth quarter of 2023 but 3.1% year-over-year. 

Sixteen of 27 EU member states beat the average, with Denmark’s 2% GDP growth leading the quarter. Croatia and Slovenia also achieved gains of more than 1%, while more modest growth was experienced in Latvia, Portugal, Spain, Cyprus, Bulgaria, Belgium, Malta, Netherlands, Slovakia, Czechia, Greece, Italy and France. 

Growth flatlined in Luxembourg, Hungary and Poland, while it retreated in Lithuania, Sweden, Germany, Romania, Estonia, Finland and Ireland. Ireland, which led the region’s GDP growth throughout much of 2022, experienced a region-leading decrease last year, with negative growth of -3.4% in the fourth quarter of 2023. 

Meanwhile, employment in the eurozone also increased slightly in the fourth quarter by 0.3%, contributing to a 1.4% annual increase in employed persons. Similarly, hours worked increased 1.3% in 2023 — although fourth quarter growth was limited to 0.1%.

Hiring was most robust in Romania, which led member states with a quarterly increase of 1.5%. Malta was just behind at 1.4%. Gains of less than 1% were recorded in Spain, Estonia, Bulgaria, Ireland, Greece, Croatia, Italy, Luxembourg, Netherlands, Belgium, Germany, France, Cyprus, Slovenia and Slovakia. 

Hiring was flat in Denmark, Lithuania and Austria, while the employment pool decreased in Czechia, Hungary, Portugal, Sweden, Poland, Finland and Latvia. All told, the region employed some 217.1 million people in the fourth quarter — though estimated labor productivity dropped by 1.1%.

The data was released a day after the European Central Bank decided to keep three key interest rates unchanged. The interest rate on the main refinancing operations — along with the interest rates on the marginal lending facility and the deposit facility — will remain at 4.50%, 4.75% and 4%, respectively.

In a press conference Thursday, ECB President Christine Lagarde said stubbornly high inflation and lower consumer spending has left the European economy weak.

Nonetheless, she made note of some positive trends and indicated the governing board may revisit the rates after more comprehensive data is available in June. 

“Consumers continued to hold back on their spending. Investment moderated and companies exported less, reflecting a slowdown in external demand and some losses in competitiveness,” Lagarde said. “However, surveys point to a gradual recovery over the course of this year. As inflation falls and wages continue to grow, real incomes will rebound, supporting growth.” 

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