Euro Area GDP

Eurozone expands in Q3 on stronger external sector

In the fourth quarter, Eurozone GDP expanded 0.3% over the previous period (Q3: +0.2% quarter-on-quarter). The result was in line with the flash estimate released by the statistical office (Eurostat) on 14 February and marked the third consecutive expansion following a streak of six periods of contraction-the longest recession in the Euro area's history. On an annual basis, the economy expanded 0.5%, which contrasted the 0.3% drop recorded in the previous quarter and marked the first year-on-year expansion in two years. The Q4 reading was the result of a stronger external sector, while domestic demand deteriorated compared to the previous quarter. Private consumption rose 0.1% over the previous quarter, which was in line with the result recorded in Q3. Fixed investment edged up from a 0.6% increase in Q3 to a 1.1% rise in Q4, the strongest reading in the last 11 quarters. Overall, domestic demand contracted 0.1% over the previous quarter, which contrasted the 0.6% expansion recorded in Q3.The result was largely affected by a negative shift in inventories. Exports of goods and services rose 1.2% over the previous quarter, which was up from the flat reading in Q3. Meanwhile, imports grew 0.4% (Q3 2013: +1.0% qoq). As exports outpaced imports, the contribution of net exports to overall growth swung from minus 0.4 percentage points in Q3 to plus 0.4 percentage points in Q4. FocusEconomics Consensus Forecast panelists expect the economy to contract 0.1% in 2014, which is unchanged from last month's forecast. For 2015, panelists expect the economy to expand 1.1%.

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Euro Area GDP Chart

Euro GDP Q4 2013

Note: Quarter-on-quarter changes of seasonally adjusted GDP and year-on-year variarion in %.
Source: Eurostat and FocusEconomics Consensus Forecast.

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