News

Eurozone GDP grows as expected

The European Union’s statistics bureau, Eurostat, says the Eurozone has grown at a rate of 0.3% in the last quarter of 2015, the same rate of growth as in the third quarter, due to industrial output falling in December. The economy has therefore grown by 1.5% in 2015, as in line with economists’ expectations [1].

The first GDP estimate released today suggests that stronger domestic demand had made up for a fall in exports and the sluggish performance of manufacturing. Investment output also expanded, alongside both public and private consumption [2].

However, the rate of GDP growth slowed during 2015, suggesting that more action may be needed to stimulate economies from the European Central Bank (ECB). “We continue to think that further monetary easing is required, with further policy rate cuts on the cards from March onwards,” said Nick Kounis, Economist at ABN Amro [3].

This comes after Sweden announced an introduction of negative interest rates through a multi-tier system, following in the footsteps of Japan who implemented the same method at the end of January this year.

Economists have said such GDP growth rates would not be enough to generate sufficient inflationary pressure to take price growth up to the ECB’s target, but close to 2% annually from 0.4% in January [1].

Kounis continued to say that: “More fiscal stimulus – in the form of public investment – in countries that have room for manoeuvre, and structural reform more widely – is also needed to support monetary policy” [1].

 

[1] Reuters UK. ‘Eurozone GDP growth as expected in fourth quarter, December industrial output falls’. reuters.com

[2] Financial Times. ‘Eurozone economy remains sluggish with 0.3% growth’. ft.com

[3] BBC News. ‘Eurozone economy grows 1.5% in 2015’. bbc.co.uk