Eurozone economy cools to 0.3% growth in third quarter

Germany’s gross domestic product rose a seasonally adjusted 0.3 percent in the three months ended September 30, after increasing 0.4 percent in the previous quarter, the Federal Statistics Office in Wiesbaden said on Friday.

Italy, the euro zone’s third biggest economy, grew 0.2 percent on the quarter – short of expectations for a 0.3 percent expansion.

The initial estimate of 0.3 percent quarter-on-quarter growth in GDP in July to September followed no expansion in the second quarter, which had raised concerns about the nation’s weak economic recovery.

“The figures add further support to the already very strong case for additional policy stimulus from the ECB at its next meeting in December”, said Jonathan Loynes, chief European economist at Capital Economics.

Italy’s economy expanded at a slower pace than forecast in the third quarter, signaling difficulties in returning to sustainable growth.

Underlining the risks to relying on consumer spending for growth, a survey by market research group Deloitte showed families across Europe look set to spend slightly less on average this Christmas, with austerity-hit Greece and Russian Federation showing the steepest declines. Background: price reductions which raised the private consumption and lower borrowing costs caused more companies to invest in the second largest economy in the euro area.

Nonetheless, HSBC reckons “the eurozone has shown remarkable resilience throughout the summer, despite the weakening global outlook”, and is therefore forecasting an nearly respectable increase of 0.4% quarter-on-quarter, which would translate into a 1.7% rise year-on-year, actually up from the previous 1.5%. The conglomerate confirmed its full-year target after posting 6.9 percent growth in third-quarter earnings. Production and investment in the construction sector both dropped 0.8% in the third quarter from the second. The figures matched analyst expectations. Portugal did not grow at all and Finland’s economy shrank a larger-than-expected 0.6%.

For the third quarter however, it was domestic consumption that helped prop up the growth.

“The turmoil in emerging markets and the Chinese slowdown have finally left a few marks on the German economy”, ING Bank economist Carsten Brzeski said.

Meanwhile, separate data from the CSO showed that goods exports fell by 4pc in September, compared with August.

Greece’s faltering economy also saw a reverse with the country’s GDP contracting by 0.5% in the third quarter, Eurostat said.