Euro zone sees surprise growth, dodges recession

STORY: The euro zone has dodged a recession.

Figures out Tuesday (January 31) showed surprise growth over the final three months of last year.

The bloc’s economy eked out expansion of 0.1% over the fourth quarter.

Not much, but better than the drop that economists had expected.

Among big countries, Germany and Italy saw economic activity contract.

But France and Spain posted expansion.

The gains come despite an energy price crunch.

Soaring costs for fuel have depleted household savings, and held back investment.

They’ve also forced the European Central Bank into unprecedented rate hikes to cool inflation.

But the region’s economy has shown unexpected resilience too.

This week that prompted the IMF to raise its forecasts for growth.

It now expects the euro zone economy to expand 0.7% this year.

That’s up from an earlier prediction of 0.5%.

Even so, growth in 2023 is expected to be among the weakest on record, thanks to falling real incomes and those surging rates.

The ECB has already lifted rates by a total of 2.5 percentage points, and markets bet there is significantly more to come.