Eurozone Economy: Macroeconomic Outlook
2023-03-02
■ Continuous economic recovery
■ Inflation remains strong, and the European Central Bank continues to raise interest rates significantly
In the euro area, due to the warm winter and the past natural gas reserves, the current pace of economic slowdown is still moderate, and the business climate of various economic entities is improving. The European Commission raised its economic growth forecast for the eurozone in 2023 to 0.9% and raised its economic outlook to avoid negative growth for two consecutive quarters.
The real GDP growth rate of the eurozone from October to December last year (the second preliminary data, 0.1% compared with the previous quarter) remains unchanged from the first preliminary data, confirming that the economy is continuing to expand, albeit at a very slow pace. In addition, the PMI index (January: 0.06), a synchronous economic index, rose to a positive region in January, indicating that the economy expanded for the first time in five months. (February: - 19.0) and Sentix investor confidence index (February: - 8.0) continued to rise. Since January, the sentiment of enterprises, households, and investors has continued to improve. It can be observed from multiple data that the prosperity of the eurozone is recovering.
In January, the consumer price index (HICP, up 8.6% year over year) slowed down for the third consecutive month. Although the peak of inflation was clear, the energy price contributed a lot. The core HICP (up 5.3% year over year) and other key inflation except food, energy, alcohol, and cigarettes were still at a high level. Even if the economy continues to slow down, the unemployment rate (6.6%) remained stable at a low level in December last year, and the European Central Bank (ECB) became more cautious about accelerating wage increases in the future. The European Central Bank's management committee decided to raise interest rates by 0.50% at its 2nd meeting, and the statement clearly stated that it would continue to raise interest rates by 0.50% at the next management committee meeting in March. Although avoiding the later policy judgment, in order to curb the rise of prices and expected inflation rate, the policy of maintaining the interest rate level of the economic restraint policy was adhered to. With the economy beginning to show signs of recovery, the scope for further tightening policies is expanding.