The Recession Has Ended

Last week's data revealed that Europe's mild recession ended with the first quarter of 2024. Two back-to-back gross domestic product (GDP) declines of -0.1% in the third and fourth quarters of 2023 were followed by growth of +0.3% in the first quarter. This growth for the quarter 1.3% on an annualized basis, approaching the U.S.'s annualized 1.6% growth in the first quarter of this year. After five quarters of economic stagnation following Russia's invasion of Ukraine and the European Central Bank's (ECB) acceleration of the monetary tightening due to the related surge in energy prices, Europe's economic growth is expected to continue over the coming quarters, according to the consensus of 50 economists tracked by Bloomberg. That consensus is in line with our forecast for a U-shaped recovery for the global economy detailed in our 2024 Global Outlook.

Europe's recession ended in 2023

: Bar chart shows quarterly GDP growth in the Eurozone, with projections from second quarter through fourth quarter of 2024. Recession period in the second half of 2023 is shaded.

Source: Charles Schwab, Bloomberg data as of 5/1/2024.

Bloomberg-tracked consensus economists' forecast. Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

Over most of the past 15 years, it has been Europe's larger, northern countries that drove Europe's growth. But in the first quarter, Spain and Portugal were among the fastest-growing eurozone economies at +0.7%, while France and Germany were among the laggards, growing by +0.2%. One driver may have been the weaker euro relative to the U.S. dollar benefiting tourism, which accounts for around 10% of the economies of Spain, Italy, Greece, and Portugal. Southern Europe has seen international tourist arrivals return to pre-pandemic levels.