European Economy Faces Recession Risk as Output Declines

The euro area economy is at risk of falling into a recession as official data shows a slight contraction in output in the third quarter. GDP across the eurozone fell 0.1% compared to the previous quarter, highlighting the struggle for growth in the region. Inflation, however, continued to slow, falling below 3% for the first time in over two years. The European Central Bank, which has been hiking interest rates to combat high prices, will welcome this decline. The eurozone economy has been impacted by factors such as the energy price surge following Russia's invasion of Ukraine and subsequent interest rate hikes. Recent survey data suggests a further weakening of demand for goods and services, and economists believe a meaningful recovery is still some way off.