FRANKFURT, Germany—Europe’s economy scraped out meager gains at the end of last year as galloping inflation fed by high energy prices and Russia’s invasion of Ukraine deterred people from spending in shops and restaurants.
The countries that share the euro currency—19 in 2022, now 20 after Croatia joined the eurozone in the new year—appeared to have avoided the worst case scenario: forced industrial shutdowns from running out of natural gas after Russia halted most supplies. Warmer weather and efforts to find new supply that comes by ship instead of pipeline from Russia have eased that worry for now.
“The main reason” pushing Europe into positive territory was strong growth of 3.5 percent in Ireland—a figure usually “distorted” by the large number of foreign firms located there for tax reasons, said Martin Moryson, chief economist for Europe at asset manager DWS. Major economies Germany and Italy shrank, by 0.2 percent and 0.1 percent, respectively.
The news comes as the International Monetary Fund raised its forecast for global economic growth this year to 2.9 percent from 2.7 percent—not great but an improvement based partly on hopes for China. A stronger global economy is important for Europe given its extensive trade links.