The eurozone looks set to avoid a recession after its economy grew unexpectedly during the final quarter of 2022, despite soaring energy prices, rising borrowing costs and record high inflation.

The region’s economy expanded by 0.1 per cent between the third and the fourth quarter of 2022, according to official data published by Eurostat on Tuesday.

The expansion was better than the 0.1 per cent drop forecast by economists polled by Reuters. The data for the fourth quarter means that the region managed to grow in each quarter of 2022, despite the energy crisis triggered by Russia’s invasion of Ukraine.

Businesses and households also had to contend with higher borrowing costs, following the European Central Bank’s decision to raise interest rates by 2.5 percentage points during the second half of 2022.

Rates were raised to combat inflation, which hit a record high of 10.6 per cent in the year to October 2022. Earlier in the day, data showed France’s economy also managed to avoid falling into recession.

The eurozone’s second-largest economy grew by 0.1 per cent between the third and fourth quarters, France’s national statistics bureau Insee said on Tuesday.

While that was below the 0.2 per cent expansion recorded over the previous quarter, it was a slight improvement on forecasts of no change recorded by Reuters. Germany reported a fourth-quarter contraction of 0.2 per cent on Monday, placing the eurozone’s largest economy on the brink of recession.

Data published on Tuesday showed Italy’s economy also contracted, but by just 0.1 per cent — a smaller amount than feared. Spain’s economy expanded by 0.2 per cent, according to figures published last week.