Stagnating eurozone GDP is worse than it seems. The eurozone economy was stagnant in the last three months of 2022, figures from European statistics agency Eurostat showed on Tuesday. Gross domestic product (GDP) failed to register any sequential growth after expanding by 0.4 percent in the third quarter. The fourth quarter figure was revised down to zero percent from a February 14 estimate of 0.1 percent growth. Year-on-year, the economic growth rate slowed to 1.8 percent from 2.4 percent in the third quarter. GDP expanded by 3.5 percent for the whole year of 2022, after registering a growth rate of 5.3 percent in 2021. Sentiment about the eurozone economy has been more upbeat recently as many bad economic scenarios have not played out. However, as more data comes in, it is clear that the eurozone economy is struggling especially for the first quarter of 2023.
US interest rates will likely go higher than anticipated. At his testimony to the US Congress on Tuesday, Federal Reserve (Fed) chair Jerome Powell said that interest rates may rise to higher levels than the Fed has previously anticipated. The Fed will probably need to raise interest rates to higher levels that previously expected in response to strong recent data and is prepared to increase the pace of the hikes if the "totality" of incoming information suggests tougher measures are needed to control inflation, Fed Chair Jerome Powell said. In their December estimate, Fed officials pegged the terminal rate at 5.1 percent. Following Mr Powell’s remarks, current market pricing moved higher to a range of 5.5-5.75 percent. Mr Powell did not elaborate on how high he thinks rates will ultimately go.
German industrial output unexpectedly rebounds in January. Official data published Wednesday showed that Germany’s industrial output rebounded in January, raising hopes that Europe’s largest economy might be able to avoid a recession. According to data released by the German statistical office Destatis on Wednesday, industrial production rose far more than expected in January, surging 3.5 percent on the decline experienced during the previous month,. The figure surpassed forecasts of a 1.4 - 1.5 percent rise and compared with a revised fall of 2.4 percent in December. The positive development "was particularly driven by stronger growth in the manufacturing of electronic equipment ... and chemicals," Destatis said. In contrast, manufacturing of motor vehicle and motor vehicle parts, as well as pharmaceutical products, showed a strong negative trend.
China’s inflation rate slows in February, casting doubt on recovery. China’s February consumer prices remained contained, as cost of food and commodities softened, casting doubt on the country’s economic recovery after the scrapping of the severe Covid-19 restrictions. The consumer prices, as measured by the Consumer Price Index (CPI) rose by one percent in February on a year-on-year basis, slower than the 2.1 percent increase recorded in January, Cooling inflation was caused primarily by a slowdown in food-price increases, said China’s National Bureau of Statistics. The result also missed by a wide margin the 1.7 percent price increase forecast by economists and was the lowest reading since the 0.9 percent gain recorded in February 2022. Analysts said that last month’s large fall in CPI inflation was broad-based, as both food and non-food inflation declined by 2.6 percent and 0.6 percent, respectively.
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