The eurozone economy failed to gear up its growth momentum in the final three months of 2018, as a number of downside risks served to dampen activity across the 19-nation economy.
The flash estimate from Eurostat shows that economic growth in the currency bloc remained at 0.2 per cent in the final quarter of 2018 compared to the previous quarter, when the economy expanded at the same pace. Compared to the same period the previous year, the region’s GDP rose by 1.2 per cent in the fourth quarter, after a 1.6 per cent increase in the prior three months.
During the second half of last year, the eurozone saw the culmination of a plethora of risks, including trade tensions, the Chinese economic slowdown, and uncertainties surrounding Brexit.
Meanwhile, in the US, the Federal Reserve (Fed) on Wednesday announced its widely expected decision to leave interest rates unchanged. Following a two-day meeting, the Fed said it has decided to maintain the target range for the federal funds rate at 2.25 to 2.50 per cent. The accompanying statement included some notable changes from the previous meeting, including dropping a reference to the Fed’s plan for further gradual rate increases.
The Fed said it still sees a sustained expansion of economic activity, strong labour market conditions and inflation near its two per cent objective as the most likely outcomes, but also pointed to global economic and financial developments and muted inflation pressures.
Finally, in the UK, annual house price growth almost ground to a halt in January as concerns over Brexit deterred buyers, according to Nationwide, Britain’s largest building society. During January, the average price of a home rose by 0.1 per cent compared to a year earlier, to £211,966. This was the smallest annual gain since February 2013, when house price growth was zero. Property values were 0.3 per cent higher in January compared to December, when they grew by 0.7 per cent.
A lack of clarity over Brexit is leaving households worried about Britain’s prospects. Separately, Bank of England figures show that mortgage approvals fell in December and consumer credit is the weakest in four years.
This report was compiled by Bank of Valletta for general information purposes only.