Upside Q4 GDP Likely Reflects Weaker Imports & Irish Distortions

EUROZONE Q4 2022 ADV PRELIM GDP +0.1% Q/Q (FCST -0.1%); Q3 +0.3% Q/Q (EA19)

EUROZONE Q4 2022 ADV PRELIM GDP +1.9% Y/Y (FCST +1.7%); Q3 +2.3% Y/Y (EA19)

• Eurozone Q4 prelim flash estimates recorded a +0.1% q/q GDP expansion, outpacing forecasts of a -0.1% q/q contraction. GDP grew +1.9% y/y in Q4, 0.2pp above expectations, albeit slowing from +2.3% y/y in Q3.
• This data is likely skewed upwards marginally by the Irish print, which recorded a +3.5% q/q 'boom'. This was on the back of strong manufacturing sector data, which is often subject to multinational reporting distortions.
• The strongest growth was otherwise seen in Latvia (+0.3% q/q), Spain and Portugal (+0.2%), whilst substantial contractions were recorded in Lithuania (-1.7%) and Austria (-0.7%).
• The sluggish Q4 growth is likely largely on the back of lower energy imports and muted consumer demand.
• This data will have little effect ahead of the ECB's Thursday meet. Despite the bloc escaping contraction once again, March forecasts are likely to move a lot lower yet, a sacrifice that the ECB stands willing to make in order to get a grip on sticky core inflation.