The eurozone economy notched up modest growth in the final three months of last year, showing the bloc has little muscle to shrug off the globe’s mounting economic problems.
After a week where stock markets around the world plunged, the 19 countries using the euro failed to lift the gloom, with data showing that growth of its GDP was just 0.3% in each of the final two quarters of 2015.
This will add to pressure on the European Central Bank to ramp up its €1.5tn money-printing scheme to buy chiefly government bonds when governors meet in March. Having spent much of their firepower, however, options are limited.
The picture varied across the eurozone, which spans economically strong countries such as Germany in the north to Greece or Portugal in the south, both of which required financial rescues.
The eurozone’s biggest member, Germany, posted steady economic growth in the final quarter of 2015, as higher state spending, to cope with an influx of refugees and construction, offset a drag from foreign trade.
Yet, Italy barely grew during the same period as domestic demand was slow. Economic output edged up a quarterly 0.1% at the end of last year.
“This is a weak recovery,” said Carsten Brzeski, an economist with ING. “The risk is that low growth means unemployment remains high and that anti-euro parties gain momentum.”
The EU’s statistics office Eurostat said GDP rose 0.3% quarter-on-quarter in the last three months of last year, the same as between July and September. Year-on-year, the eurozone economy expanded 1.5%, also as forecast by economists. Yet the final six months of 2015 lagged the start.
The data painted a bleaker picture for European industry, from car-making to mining. Industrial output fell 1% month-on-month in December — a 1.3% year-on-year fall. This was worse than expected by economists who had predicted a 0.3% monthly rise and a 0.8% annual increase in production.
Relative calm returned to world markets yesterday after a hurricane-force week that wiped billions off share prices and saw investors dash for shelter in top-rated government bonds and gold.
Japanese policymakers said they would seek a global policy response from G20 nations to world market turbulence, as the country’s central bank governor dismissed suggestions the rout was caused by the bank’s new negative interest rate policy. Deep-rooted concerns remain, however, not least about the slowing in the one-time engine room of the globe’s economy, China.
“The trade engine has broken,” said a report by the Institute of International Finance, a group representing banks and financial groups.
“Asian economic growth will remain disappointing in 2016, and we see little chance of a significant rebound in trade... the Chinese engine for Asian trade is unlikely to be reignited.”
Spain’s 2015 public deficit is likely to have missed a target of 4.2% of GDP agreed with the European Commission, and come in around 4.5% according to first estimates, the country’s acting economy minister Luis de Guindos said yesterday.
The European Commission warned Spain was likely to exceed its 2015 deficit target, forecasting 4.8% of GDP, and that more spending cuts would be needed if it is to meet its 2.8% goal.
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