Eurozone economic growth accelerated unexpectedly in the final quarter of 2014 as the bloc’s largest member, Germany, expanded at more than twice the expected rate.
A preliminary estimate showed the economy of the 18 countries sharing the euro expanded by 0.3 per cent between October and December compared with the previous three months, the European Union’s statistics office Eurostat said yesterday.
Germany’s economy grew by a robust 0.7 per cent in the last quarter of 2014, well above forecasts, while French economic activity continued to languish, official data showed yesterday.
The revival of Europe’s largest economy followed stagnation over the previous two quarters. It had been expected to expand by 0.3 per cent.
A slow summer had been overcome with household spending picking up significantly
Domestic demand lifted Germany out of its mid-year lull and allowed it to achieve 2014 growth of 1.6 per cent. The Statistics Office said a slow summer had been overcome with household spending picking up significantly.
“This is a thunderbolt,” Unicredit economist Andreas Rees said. “Some spoke of possible recession after summer but instead Germany rebounded. The fact that the growth comes mainly from the domestic economy gives strong grounds for optimism.”
France could not keep pace, growing by just 0.1 per cent, meaning the eurozone’s second largest economy advanced by just 0.4 per cent across the whole of 2014. Italy fared even worse.
“It’s obviously still too weak, but the conditions are ripe to permit a cleaner start of activity in 2015,” said French Finance Minister Michel Sapin, adding that business leaders were already beginning to increase investment.
Italy’s economy stagnated in Q4, marking the 14th consecutive quarter without any growth as an increase in exports was offset by weak domestic demand. Over the whole of 2014, GDP fell 0.4 per cent, the third consecutive decline after contractions of 1.9 per cent in 2013 and 2.3 per cent in 2012.
Spain released its Q4 figures two weeks ago and boasted quarterly growth of 0.7 per cent, the fastest in seven years. Economy Minister Luis de Guindos told Reuters last week that forecasts for 2015 could soon be lifted as high as three per cent.
The Dutch economy grew a healthy 0.5 per cent in the fourth quarter.
Greece is forecast to post growth of 2.2 per cent year-on-year, showing it has put a long and savage recession behind it, at least while it remains firmly part of the eurozone.
The eurozone as a whole is predicted to show anaemic growth of 0.2 per cent in the final three months of the year. Latest data suggest a slightly more buoyant start to the year. The January purchasing managers survey produced the best showing for eurozone firms since mid-2014 and pointed to first quarter growth of 0.3 per cent.