Europe's Economy Faces Potential Recession as Third Quarter Output Declines

The eurozone economy is at risk of entering a recession in the coming months as recent official data reveals a contraction in output during the third quarter. Eurostat, the statistical office of the European Union, has published an initial estimate indicating that the gross domestic product (GDP) of the 20 eurozone countries declined by 0.1% in the July-to-September period compared to the previous quarter.

The decline comes after a slight increase of 0.2% in the April-to-June period and emphasizes the delicate balance between economic contraction and growth in the eurozone. The gross domestic product remained stagnant in the last three months of 2022 and the first quarter of this year.

Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, stated that the overall situation in the eurozone is challenging. In the past year, its growth amounted to only 0.1%, and the latest business surveys consistently indicate a decrease in economic activity at the beginning of the fourth quarter, according to a note he wrote.

The economy, he stated, will stay sluggish regardless of whether the eurozone experiences a technical recession, which is defined as two consecutive quarters of declining GDP.

In a positive turn of events, additional data revealed that inflation continued to decrease this month. Eurostat reported that consumer prices in the euro area increased by 2.9% in October compared to the same time last year, which is a decrease from the 4.3% rate recorded in September.

This is a developing story and will be updated.