LONDON (AP) 鈥� The European economy contracted slightly at the end of last year and beginning of 2023, revised figures showed Thursday, underlining the impact of the and high inflation on consumer spending.
Economic output in the 20 countries that use the euro currency dropped 0.1% in both the final three months of 2022 and first three months of this year from the previous quarters, according to the European Union鈥檚 statistics agency Eurostat.
That means the eurozone endured two consecutive quarters of decline, which is one definition of recession often used in political and economic discussions, dubbed a .
However, the economists on a panel that declares eurozone recessions use a broader set of data, including unemployment figures. And European labor markets have held up to recent economic shocks: Unemployment is at its lowest level since before the creation of the euro in 1999, hitting 6.5% in April.
The small shift in numbers doesn鈥檛 change what households already are experiencing: , paying more interest on their mortgages and with the rising cost of living.
鈥淢aybe before I used to buy more products I didn鈥檛 need, like potato chips for example,鈥� Milo Taneron, a 26-year-old youth social worker, said while shopping in a Paris supermarket recently.
鈥淣ow, for certain products, I鈥檝e been forced to buy from low-cost brands, to drop down a level to be able to buy these products,鈥� Taneron said.
With inflation and hitting households hard and forcing them to cut back on spending, some analysts say they expect the economy to contract further this year. But the Organization for Economic Cooperation and Development said this week that it expects this year.
Bert Colijn, senior eurozone economist for ING bank, said 鈥渋t鈥檚 hard to argue that this is a recessionary environment鈥� because the decline was so small and job market is so strong.
鈥淥verall, the eurozone economy is very much back to muddling through,鈥� he said in a note.
The last update from the euro area business cycle dating committee, which was released March 27 and only dealt with data through the end of last year, said there had been 鈥渘o recession,鈥� with statistically offset by a large reduction in imports.
The committee added that 鈥渢he output growth pause contrasts with a continued, robust expansion in employment.鈥�
The economic crunch came as an last year. Its support for war-torn Ukraine led , which the continent relied on to generate electricity, power factories and heat homes.
That fueled for consumers and businesses, spiked inflation to record levels, and raised fears of rationing and blackouts. Governments and utilities scrambled to from countries like the U.S. and Qatar, avoiding disastrous utility shutoffs that had been feared last year.
to levels seen before Russia invaded Ukraine, but persistent inflation and higher interest rates that the European Central Bank is using to combat price spikes have weighed on economic growth by making credit for house purchases or business expansion more expensive.
The ECB is expected to at its June 15 meeting and keep the door open to raise further beyond that.
Bank President Christine Lagarde this week stressed the need to bring down inflation 鈥� which but is still above the ECB's goal of 2% 鈥� because it is straining everyday people.
Her comments followed recent figures from Germany showing that in the first three months of this year, marking its second quarter of contraction.
Ireland鈥檚 gross domestic product 鈥� the total output of goods and services 鈥� declined the most in the eurozone at the beginning of the year, falling 4.6%, followed by Lithuania dropping 2.1% and the Netherlands down 0.7%.
Eurostat previously estimated that the eurozone didn鈥檛 expand in the fourth quarter of 2022 and saw in the first quarter of this year.
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McHugh reported from Frankfurt, Germany. Sacha Bianchi contributed from Paris.
David Mchugh And Courtney Bonnell, The Associated Press
