Germany faces difficulties in the industrial sector

The eurozone faces the threat of a recession in the final quarter of 2023.  After the economy had already declined in the previous quarter, the weakness comes mainly from Germany, the eurozone's largest member, which is struggling in the manufacturing sector. With the ongoing turmoil and rising interest rates, analysts expect eurozone GDP to decline by 0.2% in the fourth quarter of 2023, contrary to initial estimates that forecast a 0.1% decline.

This differs from the European Commission's November forecast, which anticipated a return to growth in the final quarter of 2023, given falling inflation and a robust labour market, according to a survey of analysts by Bloomberg . Eurostat data show recent weakness driven by changes in inventories, while household consumption remains stable, 

The survey results fuel speculation that the European Central Bank may cut its benchmark interest rate faster to stimulate the economy. Some analysts warn that repeated interest rate hikes could adversely affect the economic recovery and contribute to a deepening recession.