Europe growth beats forecast

The eurozone economy grew faster than analysts forecast in the third quarter as Germany and France rebounded and Greece showed some signs of revival.

Gross domestic product increased 0.2% from the previous period, when it rose 0.1%, according to Eurostat.

The eurozone’s recovery has been in peril since economic malaise transferred from once crisis-stricken nations such as Spain and Ireland to countries in the region’s core.

With inflation close to the lowest level in five years, the ECB is preparing to add to unprecedented stimulus and urged governments to invest and deliver structural reforms to support growth.

“We’re starting to see signs of improvement,” said Alexander Koch, economist at Raiffeisen Switzerland Cooperative in Zurich.

“You’ve got a whole panoply — there are countries like Germany, which has already returned to the pre-crisis level of output, and there’s Greece.”

Greece, where a six-year recession wiped 25% off GDP and protests against austerity measures jeopardised the country’s membership of the currency bloc, recorded quarterly growth of 0.7% in the three months through September, the third consecutive increase in output.

The data may help Prime Minister Antonis Samaras as he tries to follow Ireland, Portugal, and Spain out of its rescue programme.

Germany and France, the eurozone’s two largest economies, returned to growth in the third quarter, with expansions of 0.1% and 0.3%, respectively.

Italy remained a weak spot, shrinking for a second quarter.

Cyprus was the only other member of the currency bloc to register a quarterly contraction.

The Frankfurt-based ECB has already unleashed a barrage of unconventional measures, including a negative deposit rate, long-term loans, and asset purchases, to boost growth and inflation.

Its president, Mario Draghi, said last week that policymakers commissioned proposals for fresh stimulus, stoking speculation the central bank is moving closer to sovereign quantitative easing.

“The discussion about further monetary policy measures is justified, and we expect Mr Draghi will gain the upper hand,” said Karsten Junius, chief economist at Bank J Safra Sarasin AG in Zurich.

Bloomberg


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