Eurozone: Complete data confirms steady growth in Q3
December 6, 2016
The third estimate of GDP released by Eurostat revealed that growth was steady in the Eurozone in the third quarter. GDP increased a seasonally-adjusted 0.3% in Q3 over the previous quarter, which matched the first and second preliminary estimates. The result is also the same as Q2’s 0.3% expansion. A solid performance in the domestic economy drove the result, while the external sector dragged on growth.
Households continued to benefit from improving labor market conditions and low inflation and private consumption ticked up in the third quarter. Private consumption grew 0.3% over the previous period (Q2: +0.2% quarter-on-quarter). In addition, a less austere fiscal position pushed government consumption up a notch to 0.5% growth (Q2: +0.4% qoq). However, fixed investment continued to be a weak spot in the GDP figures and recorded the lowest growth rate in over one year. Fixed investment expanded 0.2%, down from Q2’s 1.2% increase. The deceleration was likely influenced by the Brexit vote at the end of June as increased uncertainty probably caused firms to postpone investment decisions.
Brexit uncertainty likely also hit exports, which expanded a meagre 0.1% in Q3 (Q2: +1.2% qoq), the worst result since Q4 2012. Subdued external demand, along with heightened uncertainty, is weighing on the external sector. Meanwhile, imports expanded 0.2%, down from 1.2% in Q2. Overall, the external sector subtracted 0.1 percentage points from GDP growth, a deterioration from the flat contribution in Q2. It is unlikely that momentum will firm up going forward given the expected sharp slowdown in the UK—one of the Eurozone’s main trading partners—and an overall weak outlook for global trade.
On an annual basis, GDP growth was stable at Q2’s 1.7% in Q3.