(Bloomberg) — France narrowly escaped a recession in the latter half of last year, while Spain’s economy grew at the fastest pace since mid-2022 — offering hope that the euro zone can also dodge a downturn.
Most Read from Bloomberg
French gross domestic product stagnated in the fourth quarter as exports offset dwindling investment and consumer spending. In Spain, output surged by 0.6% — far exceeding the 0.2% estimated by analysts.
The data are part of a marathon day of GDP numbers from the euro area, capped by a reading for the 20-nation bloc itself that analysts reckon will confirm a first recession since the pandemic. It would only be shallow, though — not enough to hasten the prospect of interest-rate cuts by the European Central Bank.
Key Developments
-
Euro Zone Is Crawling Toward 2% Inflation With Shaky Landing
-
ECB Could Cut Rates at Any Time This Year, Villeroy Says
-
Germany Narrowly Escapes Recession But Outlook Remains Tough
Czech Republic (9 a.m.)
Outside the euro zone, the Czech economy narrowly avoided a return to recession in the final quarter of last year, growing 0.2% from the previous three months. Preliminary data showed exports were the main driver, while domestic demand also rebounded, the statistics office said.
The government and the central bank forecast a moderate recovery this year as real-wage growth fuels private consumption. But lingering supply-chain disruptions continue to pose risks for key manufacturing industries relying heavily on imports of parts and materials.
Spain GDP, inflation (9 a.m.)
The economy expanded 0.6% in the fourth quarter, driven largely by household consumption, according to state statistics agency INE. That pushed 2023 growth to 2.5%.
The country has been a recent outperformer among other large euro-zone nations, having suffered a deeper contraction than most during the pandemic. The government is looking to slowly phase out aid packages put in place after Russia’s war in Ukraine sent energy costs soaring. But it’s rolled over the bulk of them into 2024 as it continues to prop up the economy.
Separately, Spanish inflation unexpectedly quickened to 3.5% from a year ago in January — defying the 3% estimate in a Bloomberg survey of economists. This is the first early-year price data from a major euro-zone member and could dash hopes that December’s uptick was a oneoff.
Austria GDP (9 a.m.)
The country ended a six-month recession in the fourth quarter, when output rose 0.2%. Still, for 2023 as a whole GDP fell 0.7%.
“The domestic economy stabilized at a low level at the end of the year,” said the Wifo institute, which compiles the Austrian government’s statistics. “While the first signs of bottoming out can be seen in industry, the service sectors developed heterogeneously. Consumer and investment demand remained subdued.”
Bloomberg Economics on France (8:30 a.m.)
Economist Eleonora Mavroeidi:
“The French economy held up in the fourth quarter, but domestic demand slowed — both for household consumption and investment and for business investment. Overall, this suggests the economy is still struggling in the face of tight financing conditions. It also adds some modest downside risks to our forecast for growth to gather momentum in 1Q24.”
Lithuania GDP (8 a.m.)
The economy shrank 0.3% in the fourth quarter after stagnating in the previous three months — dragged down by industry, wholesale, retail and transport.
The result comes despite the Baltic country boasting the European Union’s strongest consumer sentiment after inflation plummeted to just over 1% in December from 20% in early 2023.
Output is suffering from weaker demand in export markets, and while it’s expected to rise in 2024 as a whole, high financing costs and geopolitical uncertainty will weigh.
French GDP (7:30 a.m.)
France’s reading matched the estimate from analysts surveyed by Bloomberg. For the whole of 2023, GDP expanded 0.9%, according to statistics agency Insee, which also revised the third-quarter number up to zero from a 0.1% contraction previously.
The economy isn’t expected to stage a quick recovery in 2024 as manufacturers heal only slowly after a lengthy slump and households continue to feel the squeeze from inflation, even as it recedes.
The extended sluggish patch is a problem for Emmanuel Macron as his government relies on stronger expansion to repair public finances and restrain unemployment. A study by statistics agency Insee in December showed an uncharacteristically sharp acceleration would be needed to meet the forecast of 1.4% GDP growth that grounds the 2024 budget.
Macron also faces political difficulties as farmers prolong protests to demand more support and less bureaucracy from the state. He already replaced his prime minister this month in an effort to revive his presidency after a divisive debate over immigration.
Still, a separate publication from the statistics agency showed consumer spending was resilient in December with a 0.3% gain from the previous month. Economists had expected a stagnation after a 0.6% jump in November.
Consumer confidence has shown tentative signs of improvement. While still below its long-term average, the measure reached its highest level since February 2022.
Coming Up (all times CET)
–With assistance from Joel Rinneby, Barbara Sladkowska, Ainhoa Goyeneche, Alexander Weber, Sonja Wind, Alessandra Migliaccio, Milda Seputyte, Marton Eder, Joao Lima, Giovanni Salzano and Peter Laca.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.