Eurozone: GDP suffers largest drop in almost four years
March 7, 2013
In the fourth quarter, Eurozone GDP contracted 0.6% over the previous period, confirming the result of the flash estimate released by the statistical office (Eurostat) on 14 February. The contraction was larger than the 0.1% drop seen in Q3 and marks a fifth consecutive contraction in economic activity. In addition, the reading represents the largest drop recorded since the first quarter of 2009. On an annual basis, the economy contracted 0.9%, which was down from the 0.6% drop recorded in the previous quarter. For the full year 2012, GDP dropped 0.6%, which contrasted the 1.4% expansion recorded in 2011.
The result was driven by a deterioration in the external sector. Exports of goods and services dropped 0.9% over the previous quarter, which contrasted the 1.0% rise observed in Q3 and marked the worst result observed since the first quarter of 2009. Meanwhile, imports fell 0.1%, contrasting the 0.1% increase in the previous three-month period. As a result, the contribution from net exports to overall growth fell from 0.4 percentage points in Q3 to 0.0 percentage points in Q4.
On the domestic side of the economy, private consumption dropped 0.1% over the previous quarter, which mirrored the result recorded in Q3. Fixed investment deteriorated from a 0.8% drop in Q3 to a 1.1% fall in Q4. Overall, domestic demand contracted 0.5% over the previous quarter, which was unchanged from the result recorded in the previous quarter.
FocusEconomics Consensus Forecast panellists expect the economy to contract 0.1% in 2013, which is unchanged from last month's forecast. For 2014, panelists expect the economy to expand 1.1%.
Author: Armando Ciccarelli, Head of Data Solutions