Eurozone economy hit by Ukraine war fallout as production declines

Eurozone economy hit by Ukraine war fallout as production declines

KUWAIT: The eurozone economy felt the fallout from the Ukraine war as output slowed and inflation stayed at record levels, official data showed Friday, imperiling Europe’s recovery from the pandemic. The EU statistics agency said growth in the 19 countries that use the euro crawled along at 0.2 percent between January and March, down from 0.3 percent in the final quarter of 2021. For the European Union as a whole, gross domestic product grew by 0.4 percent in the first quarter, after 0.5 percent in the last three months of 2021.

Among major economies, Spain and Germany saw growth of 0.3 percent and 0.2 percent respectively in the first three months of the year. France was flat and Italy down, minus 0.2 percent. The small increase in eurozone growth “means that the region will avoid a technical recession in the first half of the year at least,” said Andrew Kenningham, Chief Europe Economist at Capital Economics. “But rising inflation and the fallout from the Ukraine war mean that GDP is likely to contract in the next quarter,” he said.

Price shock

Compared to a year ago, the growth level in Europe still remains high, coming off the big crashes in GDP because of the coronavirus