Stockholm (Ekonamik) – At the end of October Eurostat, the European Union’s statistical office published data updates on GDP growth, inflation and unemployment.
Eurozone and EU GDP grew by 1.1% and 1.4% compared with the third quarter of 2018, respectively. Benchmarked against the previous quarter, GDP up by 0.2% in the euro area and by 0.3% in the EU28. Although the Eurozone’s growth is the lowest since the fourth quarter of 2014. Although inflation (0.7%) remains at its lowest point since November 2016, unemployment was recorded at 7.5%, its lowest since July 2008, two months before the bankruptcy of Lehman Brothers launched the world into the great recession.
Analysts were buoyed by the figures as the expectation had been worse. The focus was on reading tea leaves and trying to breakdown the performance of the currency union. “Although the release lacks detailed breakdowns, we expect Germany, which releases Q3 GDP data next month, to continue to weigh on euro area growth, while yesterday’s release from France shows domestic demand holds up resiliently as external demand falters in some other countries,” explained Erik Meyersson, Senior Economist Eurozone at Handelsbanken Capital Markets.
“The data shows that France has helped the eurozone economy outperform the more pessimistic consensus forecasts. Whether Germany is in recession remains to be seen,” said Azad Zangana, Senior European Economist and Strategist at Schroders. “Italy and Belgium also surprised to the upside, growing by 0.1% and 0.4% respectively, while Spain matched consensus estimates of 0.4% growth,” he added.
“We remain cautiously optimistic on France. Domestic fundamentals remain well anchored in our view and should continue to support growth,” commented Nadia Gharbi, Europe Economist at Pictet Wealth Management. “Our GDP growth forecasts for France remain unchanged at 1.3% in 2019 and 1.2% in 2020,” she added.
“While the Eurozone economy grew slightly faster than expected in the third quarter, its largest economy [Germany] is still in recession risk”, noted Carsten Brzeski, Chief Economist at ING Germany focused on the Teutonic nation. “This week’s data releases suggest that domestic demand has further weakened but is not faltering, yet.” With economic performance lagging behind due to Germany’s heavy dependence on the manufacturing sector, the ING economists a fiscal stimulus might just be on the cards in 2020 if it does turn out there is a contraction.
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