Saturday, 9 December 2023

Germany has become the “Problem Child” in the Slump

Beginning in the first three months of 2023, the eurozone entered a recession, with GDP falling by 0.1% from the previous quarter. As a result, Germany has earned the moniker “problem child” from an economic study firm. The 20-member euro area has lost investor confidence, according to a report from the economic analysis firm Sentix.

According to the assessment, Germany is likely the euro zone’s largest problem child. The Sentix index dropped from minus 14.5 the previous month to negative 21.1, its lowest level since November of last year.

EU and Euro Zone

The eurozone is expected to continue to decrease throughout the rest of this year, according to economists. Andrew Kenningham, the chief economist for Europe at Capital Economics, stated that the prediction “did not come as a surprise” in light of the significant negative revisions to Germany’s and Ireland’s estimates.

He questioned the validity of Ireland’s 4.6% GDP decline in the first quarter of this year and thinks the “broadly stagnant” eurozone economy will certainly cause GDP to decline once more.

  • Eurozone enters recession in early 2023, causing Germany to lose investor confidence.
  • Eurozone is expected to decrease, influenced by negative revisions.
  • Eurozone faces GDP declines due to high energy, food, and interest rates.

Initial projections had predicted the eurozone had avoided this, but the region has had to deal with high energy and food prices as well as rising interest rates to control inflation. Greece, Lithuania, Malta, and the Netherlands all saw a quarter-over-quarter fall in their GDP.

Although the EU and the euro zone’s GDP volumes are more than 2% higher than the level seen in the final quarter of 2019 before the Covid epidemic occurred, the UK avoided going into a recession at the start of the year.

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