Eurozone economic growth slowed sharply in the final quarter of 2021, as a wave of Omicron infections, supply shortages and rising energy prices took a bite out of consumers’ purchasing power.
Gross domestic product (GDP) in the 19-country region grew 0.3 percent from October to December, said the European Union’s statistics office on Monday.
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The reading marked a deep deceleration from the previous quarter’s 2.3 percent growth. On an annualised basis, the eurozone economy grew 4.6 percent in the fourth quarter.
The slower growth was mostly driven by a surge in COVID-19 infections linked to the Omicron variant of the coronavirus, and the subsequent introduction of business-sapping restriction measures in many European countries.
Virus-sensitive sectors like leisure and hospitality suffered from slowing consumer spending, which is also feeling the drag of inflation, which hit a record 5 percent in December compared to a year earlier.
European Central Bank policymakers are set to meet on Thursday to discuss how to cool the rise in consumer prices.
Rising tensions with Russia over Ukraine are also casting a pall over the eurozone.
Germany takes a hit; France, Italy fare better
Europe’s biggest economy, Germany, grew only 0.7 percent in the final three months of the year, compared to the previous quarter, and a mere 1.4 percent compared to a year ago.
Along with virus restrictions, Germany, which relies heavily on manufacturing, has been hit hard by supply chain bottlenecks and shortages of raw materials.
France, the bloc’s second-biggest economy, fared better with quarterly growth of 0.7 percent, bringing annualised growth to 7 percent – the strongest since 1969.
Europe’s third-biggest economy, Italy, grew 0.6 percent over the previous quarter and 6.4 percent over the past 12 months.
For the whole of 2021, the eurozone economy grew 5.2 percent.
That’s slower than the rebound seen in the United States, where 2021 growth came in at 5.7 percent.