Eurozone: Complete data confirms robust growth in Q3
December 7, 2017
The third estimate of GDP released by Eurostat confirmed that the economy continued to roar ahead in the third quarter. GDP increased a buoyant seasonally-adjusted 0.6% in Q3 over the previous quarter, a notch below Q2’s 0.7% rise and matching the preliminary estimates. The Euro area is enjoying a strong growth spell in recent quarters and is on track to grow at the fastest pace in over a decade this year, thanks largely to a booming domestic economy.
The domestic economy continued to grow at a robust clip in Q3, although the pace of expansion slowed slightly from Q2. Private consumption, the engine of the economy, expanded 0.3% quarter-on-quarter in Q3 (Q2: +0.5% qoq), supported by a tighter labor market and sky-high confidence. Government spending growth inched down from Q2’s 0.3% to 0.2% in Q3. Meanwhile, fixed investment expanded at a solid 1.1% pace (Q2: +2.2% qoq), amid high business sentiment combined with strong bank lending to firms.
The external sector turned more supportive to growth in the third quarter. Export growth picked up from Q2’s 1.0% to 1.2% in Q3. So far overseas sales have managed to hold up, despite an erosion in competitiveness due to a strong euro. Meanwhile, import growth slid from 1.7% in Q2 to 1.1% in Q3.
Latvia, Malta and Slovenia were the region’s star performers, all growing above 1.0% quarter-on-quarter. Regarding the region’s heavyweights, strong foreign demand caused Germany’s economy to gain steam and grow a solid 0.8%. Spain also expanded robustly, matching Germany’s pace. France and Italy grew at more modest paces of 0.5% and 0.4%, respectively.
On an annual basis, GDP growth rose from 2.4% in Q2 to 2.6% in Q3—the best result since Q1 2011.
Eurozone GDP Forecast
The Eurozone economy is seen maintaining a brisk pace of growth next year, chiefly due to a stronger labor market and robust fixed investment. FocusEconomics analysts project that GDP will expand a solid 2.1% in 2018, which is up 0.1 percentage points from last month’s forecast. In 2019, momentum is seen waning slightly, and GDP is forecast to grow 1.7%.