Europe’s largest economy might’ve contracted in the fourth quarter, but that didn’t stop the euro-area from defying expectations.

Growth managed to eke out a gain during 2022’s final three months, according to data released on Tuesday. It counted as a small miracle in the context of dire forecasts heard late last summer, when energy and power prices were spiraling higher. Economists expected a minor contraction for Q4.

The 0.1% expansion helped cushion the psychological blow from Germany’s surprisingly poor showing, which put recession fears back on the radar to start the new week.

Of course, 0.1% is functionally equivalent to a stagnant economy, and with inflation still miles above the ECB’s target and price pressures showing up in wage-setting, the region remains mired in something that feels very much like stagflation.

The odds of avoiding a downturn were long, and in some respects remain so. ING on Tuesday called Europe’s resilience amid the energy shock “incredible.” Nevertheless, the bank’s Bert Colijn said, “it was a narrow escape [and] most economies are currently stagnating with near-zero growth.” The French economy grew 0.1% in Q4, Spain conjured a 0.2% expansion and Italy saw a small contraction.

Separate data out Tuesday showed inflation in France was 6% this month (7% on a harmonized basis), up from December. Base effects matter. Government efforts to tamp down energy prices in 2022 suggest the YoY prints won’t experience the same degree of flattery as they might elsewhere. Electric bills are poised to jump 15% next month. Food prices rose more than 13% YoY in January. With the economy still holding up, French businesses may feel more comfortable raising prices to consumers. Labor unions in France are currently staging large protests.

Meanwhile, the IMF lifted its forecast for global growth in 2023 to 2.9% from the 2.7% the Fund projected in October. “The outlook is less gloomy than in our October forecast, and could represent a turning point, with growth bottoming out and inflation declining,” Pierre-Olivier Gourinchas, the Fund’s director of research, wrote, in a blog post accompanying the updated outlook.

Olivier Gourinchas called growth “surprisingly resilient” thanks to “strong labor markets, robust household consumption and business investment.” He also lauded Europe’s “better-than-expected adaptation to the energy crisis.”

Gita Gopinath, now IMF deputy managing director and a mainstay of the global macro discussion, likewise employed the “turning point” catchphrase. If you’re the type who revels in sarcastic derision for the sake of it, you might be inclined to call that an inauspicious contrarian indicator.

The IMF allowed for the following risks:

• China’s recovery could stall amid greater-than-expected economic disruptions from current or future waves of COVID-19 infections or a sharper-than-expected slowdown in the property sector.
• Inflation could remain stubbornly high amid continued labor-market tightness and growing wage pressures, requiring tighter monetary policies and a resulting sharper slowdown in activity.
• An escalation of the war in Ukraine remains a major threat to global stability that could destabilize energy or food markets and further fragment the global economy.
• A sudden repricing in financial markets, for instance in response to adverse inflation surprises, could tighten financial conditions, especially in emerging market and developing economies.

Oh, and the UK isn’t invited to the “turning point” party, by the way. The IMF still sees a contraction for Britain this year, making it the only G-7 economy with a forecasted downturn.