Eurozone Is In a Recession

Greetings from Dubrovnik! My wife and I started our vacation in Croatia last Thursday. We will be back in the USA this coming Thursday. We started our trip in Zagreb for one day and Split for three days. Now we are in Dubrovnik for the rest of our stay. Croatia is beautiful and attracts lots of tourists this time of year. Tourism is the biggest industry here but it is very seasonal. Many Croatians have moved elsewhere in Europe for steady work year-round.

The problem now is that the Eurozone has fallen into a mild recession. Real GDP fell 0.4% q/q (saar) during both Q4-2022 and Q1-2023 as soaring inflation eroded purchasing power and rapidly rising interest rates weighed on the region's economy. The European Central Bank (ECB) has raised interest rates 400bps from -0.5% in July 2022 to 3.5% at this June’s meeting of the central bank's Governing Council (chart).