Thursday – 16 Shaaban 1444 AH – 09 March 2023 AD Issue Number [16172]
Brussels: «Middle East»
The European Union’s statistics office (Eurostat) said that the eurozone did not record any economic growth on a quarterly basis in the last three months of 2022, in a slight downward revision of GDP and employment data, yet employment data remained strong.
Eurostat said in a statement that the growth of the eurozone economy fell to zero in the fourth quarter compared to the third quarter, and 1.8 percent on an annual basis. This compared to expectations for growth of 0.1 and 1.9 percent, respectively, published on February 14. Nevertheless, the revisions confirmed that the eurozone economy had narrowly avoided a previously expected technical recession.
Greece, Malta and Cyprus recorded quarterly growth of more than 1 percent, with the economies of Germany, Estonia, Italy and Lithuania declining.
Eurostat said that public spending contributed by about 0.2 percentage points, changes in inventories contributed by 0.1 percentage points, and net trade by about 1.0 percentage points. Eurostat also revised employment growth data in the eurozone downward to 0.3 percent on a quarterly basis, from 0.4 percent previously forecast. Year-on-year growth met expectations of 1.5 percent.
The strong employment growth highlights more jobs available than there are job seekers, and signals trouble for the European Central Bank in its battle to bring inflation back to 2 percent, from more than 10 percent last fall.
And at the beginning of the week, Robert Holtzmann, a member of the European Central Bank’s Governing Council, said that he supports four new European interest increases of half a percentage point each, until next July. And “Bloomberg” quoted him as saying: “I assume that core inflation will not decline sharply during the first half of the year and will remain around its current levels … In this case, I expect interest rates to increase by half a percentage point 4 times during the current year.” Holtzmann, who is the governor of the Austrian Central Bank, is considered a hawkish camp in favor of tightening European monetary policy.
At the same time, Philip Lane, chief economist at the European Central Bank, said that the bank may have to continue raising interest rates again after the expected increase during the meeting of the bank’s board of governors next week, despite statements by officials about the need to wait for the release of new economic data before talking about a new increase in interest.
Lin added in a speech in the Irish capital, Dublin, on Monday: “Our current information on inflation pressures indicates that it would be appropriate to increase interest again after our meeting in March … Certainly what we decide in May will be heavily dependent on the data.” Economic.
Lane, a former governor of the Central Bank of Ireland, stressed the need to view the “cumulative effect of the current tightening of monetary policy stance” as part of the central bank’s approach to rate hikes on a meeting-by-meeting basis. He added, “The accurate calibration after March should reflect the information contained in the upcoming macroeconomic estimates with the upcoming data on inflation and the operation of the transmission mechanism in monetary policy.
“Bloomberg” indicated that the chief economist at the central bank spoke before the bank’s decision on March 16, to increase interest again by half a percentage point, according to most expectations. And the bank raised interest rates by 300 basis points to 2.5 percent in an attempt to rein in inflation in the euro area, which reached record levels. The financial market expects the interest rate to reach 4 percent.