Eurozone economy growth at slowest rate since 2014
Eurozone growth slowed sharply in the third quarter as new emissions tests hit German car production and the Italian economy stagnated amid a stand-off with Brussels over its national budget.
Gross domestic product for the bloc increased by 0.2 per cent from the end of June, confounding expectations of economists polled by Reuters that the single currency area would maintain the 0.4 per cent pace of economic growth experienced during the second quarter of the year.
The annual pace of GDP growth was also slower than anticipated, at 1.7 per cent during the three months to September against expectations for a 1.8 per cent rise. It was 2.2 per cent in the second quarter, revised up from the 2.1 per cent initial reading for that period.
The flash data published on Tuesday follow sluggish growth figures from the eurozone’s third-largest economy, Italy, which recorded no quarterly GDP growth in the third quarter.
In France, however, the pace of growth accelerated, to 0.4 per cent from 0.2 per cent in each of the two previous quarters. The euro drifted lower in trading on Tuesday morning, with analysts citing fears over Italy GDP.
“As we believe that part of the slowdown is being caused by transitory factors, particularly in Germany, we still expect a modest bounce back in Q4 activity,” said Nicola Nobile, lead eurozone economist at Oxford Economics. “But we are conscious that ‘temporary factors’ have been overplayed to justify the slowdown in the eurozone economy at the start of the year, and that risks are clearly skewed to the downside.”
HSBC said the quarterly growth was the weakest since the European Central Bank began its policy of quantitative easing — bond purchases to stimulate the economy.
“Eurozone growth is faltering faster than we had expected …[this is] perhaps a reminder of what a future without QE might look like,” HSBC said.