Euro Zone Economy Lags Global Growth as Germany Struggles

• The euro zone's economy stagnated last year, underperforming the rest of the world as former powerhouse Germany struggled with an industrial malaise that has no end in sight, data showed on Tuesday.
• The 20 countries that share the euro barely avoided a recession in the final quarter of last year even as the global economy expanded and the euro zone's biggest trading partner, the United States, chalked up impressively brisk growth.
• The euro area's underperformance was mostly due to weakness in Germany, which has seen its business model relying on cheap energy from Russia and intense two-way trade with China upended by geopolitical events.
• Europe's largest economy shrank by 0.3% in the last three months of 2023 while the bloc as a whole saw steady output, helped by expansions in Spain and Italy, Eurostat' preliminary flash estimates showed. That marked the sixth consecutive quarter of no or little growth.
• Economists expect more of the same in the coming months before a timid recovery in the summer, which should lead to another year of meagre growth for the euro area.
• "Stronger household consumption as the effects of the shock to energy prices subside and inflation falls, supporting real income growth, is expected to drive the recovery," the International Monetary Fund said on Tuesday in its World Economic Outlook. Still, it downgraded its euro area economic growth forecast to 0.9% this year and 1.7% in 2025.

 (Source: Reuters)