Eurozone: Eurozone GDP picks up momentum in Q4
February 13, 2015
In Q4 2014, Eurozone’s GDP increased a seasonally-adjusted 0.3% over the previous period, according to the flash estimate released by the statistical office (Eurostat) on 13 February. The reading came in above both the 0.2% expansion recorded in the previous quarter and the 0.2% increase the markets had expected and thus pointed to a continuation of the gradual economic recovery in the common-currency area. Compared to the same quarter of the previous year, the economy expanded 0.9%, which marked a slight improvement over the 0.8% increase observed in Q3.
Looking at the four major countries in the region, Germany and Spain recorded significant pick-ups in the fourth quarter (+0.7% quarter-on-quarter). Conversely, economic growth in France slowed over the previous period (Q4: +0.1% qoq; Q3: +0.3% qoq) while Italy registered its 14th quarter without an increase in total output. Elsewhere, the Greek economy contracted again, following three quarters of expansion. Q4’s result in Greece likely reflected growing uncertainty ahead of the January elections that had the left-wing Syriza party lead a new government.
In 2014, the Eurozone economy expanded 0.9%, which recovered from the 0.5% contraction registered in 2013. With the Eurozone economy moderately recovering and consumer prices in decline, the European Central Bank will launch in March of this year a new stimulus program under which it will buy over EUR 1 trillion of mainly government bonds until September 2016. Doubts remain regarding the impact of the QE program on the Eurozone economy, as skepticism persists as to whether this controversial measure will help to revive the Euro area economy. Moreover, it remains to be seen whether the ECB is open to adopting further measures in the future should the QE action pack not provide the expected support to inflation and growth.
Author: Ricardo Aceves, Senior Economist