The euro-area economy managed to stabilize in the fourth quarter of 2023, defying expectations of a recession, despite weakness in Germany, one of its major members.

According to preliminary data released by the European Union’s statistics agency Eurostat on Tuesday, gross domestic product (GDP) in the bloc remained unchanged in October to December compared to the previous quarter. This performance exceeded economists’ projections of a 0.1% contraction as reported by The Wall Street Journal. A contraction of this magnitude would have met the criteria for a technical recession after the economy shrank 0.1% in Q3 2023.

Notably, Germany, which is the largest economy in Europe and a historical driver of economic activity in the region, dragged down the overall growth rate with a contraction of 0.3%. The only economy that experienced a more severe decline was Ireland, which contracted by 0.7%.

Among other larger euro-area nations, France reported flat growth, while Italy saw a growth of 0.2%, Belgium recorded a growth of 0.4%, and Spain experienced the highest growth rate at 0.6%.

Going forward, the euro-area economy is expected to gradually recover in the new year amid easing inflation and anticipated interest rate cuts by the European Central Bank (ECB).

Although money markets have priced in a first rate cut in April, ECB President Christine Lagarde emphasized during last week’s monetary-policy meeting that it would be premature to discuss rate cuts at this time.

In its December macroeconomic projections, the ECB forecasted that the bloc will achieve a growth rate of 0.8% in 2024.

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