European economies slowed markedly at the end of 2021 as surging COVID-19 cases driven by the Omicron variant piled on top of supply chain shortages and rising energy prices that dented consumer purchasing power.
Much of the slowdown came in Germany, Europe's largest economy, where difficulty getting needed parts held back its export-heavy manufacturing sector. France, Spain and Italy showed moderately stronger growth.
In the 19 countries that use the Euro currency, growth in the last three months of 2021 came in at 0.3%, the European Union's statistics agency said. That compared with growth of 2.2% in the July-September quarter.
For all of 2022, the Euro zone economy grew 5.2%, underlining how Europe’s economic recovery from the pandemic has moved at a somewhat slower pace than the rebound in the U.S., where 2021 growth came in at 5.7%.
A major reason for Europe’s slowdown was spiking COVID-19 cases that led to new and shifting restrictions and deterred cautious consumers from spending money on restaurants, hotels and entertainment.
That comes on top of clogged supply chains, which are leaving Europe’s export-oriented manufacturing sector unable to fill orders, and higher prices for oil, natural gas and electricity, which are weighing on businesses and consumers.
Germany, usually a growth motor for the Euro zone, shrank 0.7% in the fourth quarter. France, the second biggest European economy, saw growth of 0.7% over the previous quarter, leaving its yearly growth at 7%, the strongest rate of expansion since 1969.
The Euro zone’s inflation rate was a record 5% in December and unemployment was running at 7.2% in November, the latest figures available show.
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