By Anthony Marcus, for Eurasia Business News – June 8, 2022

In the first quarter of 2022, Gross Domestic Product (GDP) increased by 0.6% in the euro area and by 0.7% in the EU compared with the previous quarter, according to an estimate published by Eurostat, the statistical office of the European Union. Figures are seasonally adjusted.

In the fourth quarter of 2021, GDP had grown by 0.2% in the euro area and 0.5% in the EU.

During the first quarter of 2022, GDP in the United States decreased by 0.4% compared with the previous quarter (after +1.7% in the fourth quarter of 2021). Compared with the same quarter of the previous year, GDP increased by 3.5% (after +5.5% in the fourth quarter of 2021).

From October to December 2021, GDP growth had reached 0.3% for the 19 countries sharing the single currency. 

GDP growth by Member State
Ireland (+10.8%) recorded the highest increase of GDP compared to the previous quarter, followed by Romania (+5.2%) and Latvia (+3.6%).

Decreases of GDP were observed in Sweden (-0.8%), France (-0.2%) and Denmark (-0.1%). However, in France, French President Emmanuel Macron and his political allies everyday voice how successful are their economic and monetary policies. French citizens will elect members of their legislative assembly on June 12 and 19. The current bad economic figures and high inflation could favour the socialist and communist alliance under the name “NUPES”.

GDP components

During the first quarter of 2022, household final consumption expenditure decreased by 0.7% in the euro area and by 0.5% in the EU (after -0.3% in both the euro area and the EU in the previous quarter). Government final consumption expenditure decreased by 0.3% in both the euro area and the EU (after +0.4% in the euro area and +0.5% in the EU in the previous quarter). Gross fixed capital formation increased by 0.1% in the euro area and by 0.7% in the EU (after +3.1% and +2.7% respectively). Exports increased by 0.4% in both the euro area and the EU (after +2.7% and +2.9%). Imports decreased by 0.6% in the euro area and by 0.2% in the EU (after +4.7% and +4.2%).

Based on seasonally adjusted figures, GDP volumes in the euro area and EU were 0.8% and 1.5% respectively above the level recorded in the fourth quarter of 2019, before the COVID-19 outbreak.

For the United States, GDP was 2.8% higher than the level of the fourth quarter of 2019.

Employment growth in the euro area and EU

The number of employed persons increased by 0.6% in the euro area and by 0.5% in the EU in the first quarter ofn 2022, compared with the previous quarter. In the fourth quarter of 2021, employment had increased by 0.4% in both the euro area and the EU.

Compared with the same quarter of the previous year, employment increased by 2.9% in the euro area and by
2.8% in the EU in the first quarter of 2022, after +2.1% in both zones in the fourth quarter of 2021.

Households spend less

Household final consumption expenditure had negative contributions to GDP growth in both the euro area and the EU (-0.3 percentage points – pp in both zones). The contributions from government final expenditure were negative (-0.1 pp in both zones). The contribution of gross fixed capital formation was negligible for the euro area and positive for the EU (0.0 pp and 0.1 pp respectively). The contributions from the external balance were positive (0.4 pp for the euro area and 0.2 pp for the EU). The contributions from changes in inventories were positive for both zones (0.6 pp for the euro area and 0.7 pp for the EU).

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High inflation on consumer prices is the main cause of this low GDP growth in the euro area in the Q1 2022. With an inflation between 5.1% in January and 7.4% in March , middle-class and working class households cannot afford anymore to buy consumer goods and services as they used to do. The European Central Bank and governments have caused this high inflation, with quantitative easing and low rate policies since 2010 and taxation of investments in industrial productivity. Too much printed money and decreasing industrial production capacities lead automatically to higher prices of goods and services. High inflation has been back in Europe since July 2021, statistical figures show. War in Ukraine since February 24 has added tension and pressure in markets and energy supplies, but is not the main cause of the current inflation.

The euro area annual inflation rate hit 8.1% in May, after reaching 7.4% in April and 7.5% in March. In February, inflation hit 5.4%. A year earlier, registered annual inflation was only 1.6% in the euro zone.

What is the Euro area ?

The euro area (EA19) includes Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

The European Union (EU27) includes Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden.

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