Eurozone Robust Growth Continues In Q3
November 14 2017 - 3:43AM
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Eurozone economy maintained its robust growth momentum in the
third quarter, suggesting that it is set to end the year on a
strong note, and extend support to the European Central Bank's
decision to reduce the size of its asset purchases at the start of
next year even as inflation is away from its target.
Gross domestic product grew 0.6 percent from the previous three
months, when the single-currency economy expanded 0.7 percent,
preliminary data from Eurostat showed Tuesday. Year-on-year growth
in the euro area accelerated to 2.5 percent from 2.3 percent.
The figures were in line with the initial estimates released on
October 30.
The annual growth rate of the 19-nation economy outpaced the
United States' 2.3 percent expansion in the third quarter. The pace
also exceeded the UK's 1.5 percent growth during the same
period.
Among the big four economies of the euro area, Germany and Italy
released their third quarter growth data on Tuesday. The pace of
expansion improved in both economies.
The biggest Eurozone economy grew 0.8 percent sequentially in
the third quarter, after a 0.6 percent expansion in the previous
three months, Destatis announced. Economists had expected the rate
to remain unchanged.
The year-on-year growth rate climbed to 2.8 percent from 2.3
percent growth seen a quarter ago.
Positive contributions to sequential growth came from foreign
trade and investment. In the third quarter, the increase in exports
was higher than that of imports.
Survey data from the think tank ZEW showed on Tuesday that
German investor confidence hit a six-month high in November. The
ZEW Indicator of Economic Sentiment for Germany rose to 18.7 from
17.6 in October. Nonetheless, the score was below the expected
level of 19.5.
Overall high levels of growth across Europe in the third quarter
are supporting further growth in Germany and boosting expectations
for the coming six months, ZEW President Achim Wambach said.
"This favorable economic climate should be used to create a
stronger and more robust basis for future growth," Wambach
added.
Italy's quarterly growth rate accelerated to 0.5 percent from
0.3 percent, and exceeded economists' forecast for 0.4 percent
growth. There was a positive contribution both to the national
component and to foreign exports, the statistical office Istat
said.
On a yearly basis, economic growth improved to 1.8 percent from
1.5 percent in the previous quarter. Economists had forecast 1.7
percent expansion.
Late October, the ECB said the size of its monthly asset
purchases will be halved to EUR 30 billion at the start of next
year, but they will continue for nine months.
The bank opted the "lower for longer" style of tapering for a
second time this year and many hope this would be the beginning of
the end of ultra-easy monetary policy since the 2007-08 global
financial crisis.
That said, the bank has stressed that the economic recovery is
still dependent on the monetary stimulus as inflation is yet to
return to its target of "below, but close to 2 percent".
Last week, the European Commission forecast that Eurozone is set
for its fastest growth in a decade this year, thanks to the
resilient private consumption, stronger global growth and falling
unemployment.
The executive arm of the European Union raised the euro area
growth forecast for this year to 2.2 percent from 1.7 percent. The
slowing pace of job creation and household purchasing power growth
implies a slight moderation in momentum over the next two years,
the EU said.
Separate data from Eurostat on Tuesday showed that industrial
production dropped for the first time in three months in
September.
Industrial production fell 0.6 percent month-on-month, reversing
a 1.4 percent rise in August, in line with economists'
expectations. On a year-on-year basis, production growth slowed to
3.3 percent from 3.9 percent.
"The flash estimate of euro-zone Q3 GDP confirmed that the
economy is in very good health," Capital Economics economist
Jennifer McKeown said.
"Admittedly, industrial production fell in September and the
renewed rise in the euro exchange rate is a downside risk to
exports."
Capital Economics still believes the message from the surveys is
that the upturn will continue apace, the economist added.
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