The eurozone slid into recession in the first quarter, according to figures published Thursday by the European Union's main statistical agency. Germany, by far the largest economy in the 20-strong bloc of countries that use the euro, went into recession in January to March period. File photo by Hayoung Jeon/EPA-EFE
June 8 (UPI) -- The economy of the eurozone contracted for the second straight quarter in the January to March period, according to European Commission estimates out Thursday, meaning the 20-country bloc meets one definition of a recession.
The 0.1% decrease in seasonally adjusted first-quarter GDP in the countries that use the euro follows directly on from a 0.1% drop in the fourth quarter of 2022, qualifying the downturn as a technical recession, figures from Eurostat, the statistical office of the European Union, show.
Eurozone growth was hit by a large fall in government spending -- down by 1.6% -- and a lesser decline of 0.3% in consumer spending and while gross fixed capital formation increased by 0.6%, exports were down 0.1%.
Household finances have been hammered by a cost-of-living crisis from the sharply higher energy and food prices sparked by Russia's invasion of Ukraine, sending inflation soaring to the highest levels in the 24 years since the single currency bloc was established.
While eurozone inflation has dropped sharply from a high of 10.6% in the fall down to 6.1% in May, the decline is too recent to be reflected in the estimates.
The zone may also have been suffering the impact of Germany, its largest economy, falling into recession in the first quarter.
The EU economy as a whole, however, rebounded from a 0.2% contraction in October to December period to post a small first-quarter expansion of 0.1%.
Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 1% both in the euro area and in the EU in the first quarter of 2023, after growing 1.8% in the eurozone and 1.7% in the EU in the previous quarter.
Poland led the pack with quarter-on-quarter GDP growth of 3.8% followed by Luxembourg where GDP rose by 2% and Portugal which grew by 1.6% -- but their performances were negated sharp falls in GDP in some countries.
Ireland's economy shrank by 4.6% while GDP in Lithuania fell by 2.1% and the Netherlands' by 0.7%.
That compares with a U.S. economy that expanded in the first quarter, albeit at half the rate of the fourth quarter of 2022, adding 0.3% to GDP. However, growth was up 1.6% compared with the first quarter of 2022.