Europe’s economy expanded by a modest 0.2% in the third quarter of 2023, according to official data released on Thursday. The growth in the eurozone, comprising 20 countries, was constrained by higher U.S. tariffs and lackluster performances from key economies like Germany and Italy, both of which narrowly avoided technical recessions. Germany’s economy stagnated with zero growth in the July-September period, following a 0.2% contraction in the second quarter. Italy similarly recorded zero growth after a 0.1% decline in the previous quarter. Germany’s manufacturing and export-driven economy faces multiple challenges, including elevated energy prices, competition from Chinese producers, a shortage of skilled labor, and bureaucratic inefficiencies. Additionally, Europe is grappling with the impact of a 15% tariff imposed by the U.S. on European goods and ongoing uncertainty surrounding potential tariff hikes. Despite the weak growth, the European Central Bank (ECB) has maintained its key interest rates at 2%, signaling no immediate plans for further cuts. This stance contrasts sharply with the U.S. Federal Reserve, which recently reduced its benchmark rate by a quarter percentage point and is considering additional cuts. ECB President Christine Lagarde has emphasized that monetary policy is ‘in a good place,’ with annual inflation at 2.2% in September, close to the bank’s 2% target. Analysts predict that the ECB’s next rate adjustments may involve moderate increases in late 2024, driven by anticipated growth from German infrastructure and defense spending.