This picture taken Jan 1, 2022 shows the European Union flag under the Arc de Triomphe, on the Place de l'Etoile in Paris. The European Union GDP barely escaped the fourth quarter, as ALAIN JOCARD AFP BRUSSELS economic output increased infinitesimally and the eurozone's GDP went up in the fourth quarter, but uncertainty remains, according to official data released Tuesday.
Market observers believe that the outlook in Europe is still overshadowed by spiraling inflation and contracting demand, although the worst fears for the European economy did not materialize in 2022.
In the last quarter of 2022, the eurozone's GDP saw an increase of 0.1 percent over the previous quarter, according to Eurostat, the statistical office of the EU.
Bert Colijn, a senior economist at ING, said in a note that it was a narrow escape and that the eurozone economy once again defied recession in the fourth quarter. The economic data for the EU and the eurozone painted a rosier picture on an annual basis.
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In the fourth quarter, the eurozone's GDP increased by 1.9 percent and that of the EU by 1.8 percent, compared to the same quarter in 2021.
The eurozone economy went up four consecutive quarters last year with GDP going up by 0.6 percent, 0.8 percent, 0.3 percent and 0.1 percent.
In the eurozone, GDP growth was 3.5 percent and 3.6 percent in the EU.
The warm winter in Europe has played a major role in bringing down the demand for natural gas. European countries refilled their natural gas storages with imported natural gas LNG natural gas prices, natural gas prices decreased significantly.
Economists used to worry that a natural gas shortage could lead to rationing and suspension of production in European factories.
The post-pandemic strong consumption in Europe turned out to last longer than expected. The European countries' support to shore up their economies has also contributed to the prevention of a contraction in Europe in the last quarter of 2022, as well as the measures taken by them to shore up their economies.
Colijn, senior economist at the ING, said European economies are not out of the woods yet, and growth in Europe has slowed to the point of stagnation.
Domestic demand in European countries is likely to decline as high inflation is eating into consumers' purchasing power.
There are reports of contracting domestic demand in Germany, France and Spain, but doubts about the sustainability of robust exports and investment pressures will probably plunge the European economy into a recession in early 2023, according to reports of contracting domestic demand in Germany, France and Spain.
READ MORE: Europe's inflation problem will linger for a long time to come.
Thiess Petersen is a senior advisor at the Bertelsmann Stiftung in Germany and believes that energy supply will still haunt the European economy in 2023.
He said that security of energy supply is a top priority for 2023 and that is why he said in a report published in December.