The Eurozone economy contracted by 0.1% in the third quarter of 2023

The European Statistical Office, Eurostat, announced on Tuesday that the euro zone economy contracted by 0.1% in the third quarter of 2023 compared to the previous quarter.

According to the data, the region’s economy registered a slight growth of 0.1% in the third quarter of this year compared to the same period last year.

Inflation in the Eurozone fell to its lowest level in two years in October, recording 2.9%, which is lower than the previous reading of 4.3% in the previous month.

This number was lower than the expected estimate of 3.1%, according to a Reuters poll of economists.

In addition, core inflation, which excludes volatile food and energy prices, fell to 4.2% annualized in October from 4.5% in September.

This contraction in economic activity and low inflation comes despite the efforts of the European Central Bank, which has increased interest rates ten times in a row, to combat the sharp rise in inflation.

However, the central bank recently took the decision to freeze interest rates despite concerns related to rising energy costs due to current events, such as the ongoing war between Israel and Hamas.

The European Central Bank expects 0.7% growth for the eurozone economy this year, 1% growth in 2024, and 1.5% in 2025.

Despite the negative numbers, Germany, Europe’s largest economy, recorded a smaller-than-expected 0.1% contraction in GDP for the third quarter.

This relatively strong performance reflects expectations of a 0.3% decline expected by economists in a Reuters poll, compared to the same period last year, the German economy decreased by 0.8%.

Overall, restoring European economic growth and improving inflation requires sustained efforts on the part of economic policies and financial institutions.