Tomorrow at 10.00 UK Time, the European statistics office Eurostat will release the final estimate of real 1Q GDP. Christophe Barraud, recognized as one of the “Top Forecaster” by Bloomberg, suggests it could surprise downward, contracting for a second straight quarter. It implies that Eurozone would have experienced a technical recession.
The consensus is already expecting a downward revision to 0.0% as Germany, Europe’s leading economy, saw a large downward adjustment and previous Eurozone estimate was only +0.07% (unrounded).
Germany experienced its initial recession since the beginning of the pandemic, dashing hopes of evading such an outcome after the conflict in Ukraine led to a surge in energy prices. According to the German statistics office‘s announcement, the country’s first-quarter output contracted by 0.3% compared to the previous three months, following a 0.5% decline between October and December. The office had initially estimated stagnation in its previous report.
More recently, the Irish economy experienced a 4.6% decline in its 1Q GDP. This decrease is 1.9% higher than the previous estimate provided by the Central Statistics Office (CSO) earlier this year.
Lastly, Greece experienced an economic decline in the beginning of the year. According to the Hellenic Statistical Authority‘s report on Wednesday, the country’s GDP decreased by 0.1% in the first quarter of the year compared to the previous three months. This decline follows a 1.1% expansion in the fourth quarter of 2022.
Bottom line: Even though several countries saw a positive revision (such as Italy), it seems that downward revision in Germany and latest estimates from Ireland and Greece increased the risk of a negative print tomorrow, which would be synonym of a technical recession in Eurozone (if 4Q GDP remains unchanged at -0.1%).