The economy of the Eurozone shrank by 0.1% in the first quarter of 2023, according to revised data from Eurostat cited by Bloomberg. This marks the second consecutive quarter of decline, with the fourth quarter of last year contracting by 0.1%. This is the first bi-annual recession in Europe since the outbreak of the Coronavirus pandemic. Political leaders of the EU and the employees of the European Central Bank (ECB) have been dealt a blow, as they had repeatedly claimed that the downturn could be avoided even when inflation hit a record high in the Eurozone’s entire history.
The recession occurred against the backdrop of a strong rise in energy prices during the winter period brought about by Russia’s special operation in Ukraine and restrictions imposed by Western countries against Russia. According to Eurostat, the decline in the GDP of the Eurozone in the first quarter was due to a decrease in government and household spending. The negative contribution also came from a decrease in inventory of goods and recovery in trade which provided some support for the European economy.
Of the 20 countries in the Eurozone, seven have been affected by the recession, according to Forbes. The economies of Germany, Lithuania, Malta, the Netherlands, Greece, Ireland, and Estonia all contracted in the first quarter of this year. Estonia’s GDP has not grown since the end of 2021.