Eurozone: Complete data confirms robust growth in Q4
March 7, 2018
The third estimate of GDP for the fourth quarter released by Eurostat confirmed that the economy ended 2017 on a solid note. GDP increased a buoyant seasonally-adjusted 0.6% in Q4 over the previous quarter, a notch below Q3’s 0.7% rise and matching preliminary estimates. For the full year 2017, GDP expanded 2.5%, notably above 2016’s 1.8% increase and the highest reading in ten years.
The domestic economy broadly kept pace in Q4. Private consumption, the engine of the economy, expanded 0.2% quarter-on-quarter in Q4 (Q3: +0.3% quarter-on-quarter), supported by tightening labor market conditions and robust confidence. Government spending growth remained stable at Q3’s 0.4%. Meanwhile, fixed investment rebounded and expanded at a solid 0.9% pace (Q3: -0.3% qoq), on the back of strong business sentiment.
The external sector continued to support growth in the fourth quarter. Export growth picked up from Q3’s 1.6% to 1.9% in Q4. Despite a strong euro, overseas sales continued to expand at a brisk rate. Meanwhile, import growth accelerated from 0.6% in Q3 to 1.1% in Q4.
Estonia, Slovenia and Lithuania were the region’s star performers, all growing above 1.0% quarter-on-quarter. Regarding the region’s heavyweights, robust external demand supported Germany’s economy, which nevertheless lost some steam and grew 0.6%, the same rate as France’s economy. While Spain’s economy expanded a solid 0.7%, Italy’s grew at a more modest pace of 0.3%.
On an annual basis, GDP growth was stable at Q3’s 2.7% in Q4—the best result since Q1 2011.
Eurozone GDP Forecast
The Eurozone economy is seen maintaining a brisk pace of growth this year, chiefly due to a stronger labor market and robust fixed investment. FocusEconomics analysts project that GDP will expand 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%.