The eurozone’s economy lost steam in the latest quarter as Portugal stalled, Germany slowed and debt-stricken Greece contracted.
Gross domestic product (GDP) across the 19 countries in the single currency bloc rose just 0.3% in the third quarter, according to Eurostat. That defied expectations for growth to hold at 0.4%, according to a Reuters poll of economists. On a year earlier, GDP was up 1.6%, lower than forecasts for 1.7%.
Euro area GDP +0.3% in Q3 2015, +1.6% compared with Q3 2014 #Eurostat - https://t.co/t83KcLWq89 pic.twitter.com/zwRG0uzVJh
— EU_Eurostat (@EU_Eurostat) November 13, 2015
The July to September figures mark a slowdown from eurozone GDP growth of 0.4% in the second quarter and 0.5% in the first quarter and come as the European Central Bank (ECB) hints that it is planning to inject further funds into the eurozone economy to maintain recovery.
Germany, the eurozone’s biggest economy, grew 0.3% as expected, but that was a notch down from 0.4% growth in the previous quarter. France’s economy grew 0.3%, a rebound from no growth in the second quarter.
But Italy, the Netherlands, Portugal and Finland all undershot market expectations. Greece swung from growing 0.4% in the second quarter to shrinking 0.5%.
#Italy's GDP +0.2% in Q3, slightly below PMI signal. More sluggish growth signalled so far in Q4 pic.twitter.com/SEN038nZUm
— Chris Williamson (@WilliamsonChris) November 13, 2015
Italy, the bloc’s third-largest economy after Germany and France, grew 0.2%, behind a Reuters poll forecast for 0.3%. GDP in the Netherlands was up a mere 0.1% against expectations of 0.3%. Portugal did not grow at all and Finland’s economy shrank a larger-than-expected 0.6%.
The ECB president, Mario Draghi, has previously signalled he is prepared to cut interest rates and increase quantitative easing (QE) to stave off the risk of a renewed economic slump in the eurozone. Economists said the latest figures would add to impetus for him to act on recent comments.
“The euro area’s pace of economic growth lost a little momentum in the third quarter, despite the additional central bank stimulus seen so far this year and a weakened, competitive, currency,” said Chris Williamson, chief economist at Markit, which compiles surveys on eurozone economies.
“The subdued pace of growth and persistent weak inflation applies further pressure on the ECB and increases the likelihood of the further measures being announced in December.”
This early estimate of eurozone GDP does not contain any detail on what was driving growth, economists noted. But based on surveys and data out from individual countries it appeared household spending was doing the heavy lifting, they said.
Meanwhile, manufacturers have been struggling with a slowdown in global demand on the back of China’s downturn and turmoil in other emerging market economies.
“Consumers probably saved the day for the eurozone economy in the third quarter. Both the renewed fall in energy prices and the declining unemployment rate have likely boosted disposable income, supporting consumption, in our view the single most important driver of the expansion at this moment,” said Peter Vanden Houte at ING Financial Markets.
“Bottom line: the eurozone recovery is continuing, but it seems like driving with the handbrake on. With the emerging countries still in the doldrums, little acceleration is to be expected in the coming quarters.”
