The GDP of the euro zone stops short and inflation hits a historical ceiling of 10.7%


The effects of the war in Ukraine, the energy crisis and historically high inflation have caused the euro zone economy to slow down in the third quarter of the year. The GDP of the countries that share a currency barely advanced 0.2% between July and September, in a context of unstoppable price escalation. This is demonstrated by the fact that the annual rate of the CPI in October reached levels not seen since the currency came into circulation, at 10.7%. It is the photograph that best reflects how the crisis shows its claws in Europe, where recession could be closer -in light of the warnings made by organizations such as the International Monetary Fund, the OECD or the European Central Bank itself.)

The advance of the data published this Tuesday by the Community Statistics Office, Eurostat, shows how the ‘blackmail’ initiated by Vladimir Putin after sanctions for the invasion of Ukraine have made energy the most bullish component of inflation. Specifically, it has seen its annual rate accelerate eight tenths from the 9.9% that it fired last September. Its annual rate thus rises to 41.9% from 40.7% in September. It would be followed by food, alcohol and tobacco (13.1%, compared to 11.8% in September), non-energy industrial goods (with a rise of 6.0%, compared to 5.5% in September) and services (whose prices increased by 4.4%, compared to 4.3% in September).

This increase in prices in the euro zone occurs despite the fact that the European Central Bank has announced its third consecutive rise in interest rates (of 0.75 basis points) to place the reference rate at 2% in October, its highest level since 2009, in the midst of the financial crisis. This is because the effects of monetary policy tightening are not immediately apparentbut there is a period of several months in which they are not yet visible.

The rise in prices is accelerating in the euro zone… not in Spain

The increase in prices is accelerating in the region, just the opposite of what has been happening in Spain, where annual inflation peaked in July at 10.8% and since then has been maintaining a moderation path that would already place it at 7.3% in October, according to the advance published last week by the Institute National Statistics (INE). From the Ministry of Economy they value how this month, the country has registered the second lowest interannual inflation rate in the entire euro zone and how this is already 3.4 percentage points below the average of the region.

With regard to growth in the euro zone, it went from 0.8% in the second quarter to 0.2% in the third, so the slowdown was greater than in the whole of the European Union to Twenty-seven, where it went from 0.7 to 0.2%. It has also been its most moderate advance since the beginning of 2021, when many of the restrictions approved to stop the advance of Covid-19 were still in force.

Compared to the same quarter a year ago, the GDP of the euro zone grew by 2.1%, while that of the EU grew by 2.4%. Among the countries that have already made their information public, Sweden registered the highest quarterly growth (0.7%), followed by Italy (0.5%), Portugal and Lithuania (both 0.4%). Meanwhile, Latvia (-1.7%), Austria and Belgium (both -0.1%) already registered a contraction in activity.

In Spain, GDP slowed its growth rate in the third quarter to 0.2%, from 1.5% registered between April and June. Sources from the Department headed by Nadia Calviño point out that the data made public by Eurostat show the “resilience” of the Spanish and European economies. The European economy has continued to grow even with the Russian gas cut”point out, while pointing out how the interannual economic growth in Spain in the third quarter exceeded the average growth of the euro zone by almost 2 percentage points.


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