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| Eurozone recovery falters as Greece slips back into recession | Eurozone recovery falters as Greece slips back into recession |
| (35 minutes later) | |
| The eurozone recovery remains disappointingly weak after Greece fell back into recession and Italy slowed to near stagnation. | The eurozone recovery remains disappointingly weak after Greece fell back into recession and Italy slowed to near stagnation. |
| The single currency area grew by just 0.3% in the final quarter of 2015, statistics body Eurostat reported on Friday. | The single currency area grew by just 0.3% in the final quarter of 2015, statistics body Eurostat reported on Friday. |
| On an annual basis, the eurozone expanded by 1.5%, down from 1.6% three months earlier, suggesting growth remains weak despite the European Central Bank’s stimulus measures and the positive impact of cheap oil. | On an annual basis, the eurozone expanded by 1.5%, down from 1.6% three months earlier, suggesting growth remains weak despite the European Central Bank’s stimulus measures and the positive impact of cheap oil. |
| Greece was the worst performing member of the eurozone, with GDP falling by 0.6% in the last three months of last year. That followed a steep contraction of 1.4% between July and September, when capital controls were imposed and its banks were shut. | Greece was the worst performing member of the eurozone, with GDP falling by 0.6% in the last three months of last year. That followed a steep contraction of 1.4% between July and September, when capital controls were imposed and its banks were shut. |
| “Greece continued to be hampered by fiscal austerity and capital controls,” said Howard Archer of IHS Global Insight. | “Greece continued to be hampered by fiscal austerity and capital controls,” said Howard Archer of IHS Global Insight. |
| Greek Q4 GDP contracts 0.6 pct QoQ, recession of 0.7 pct in 2015 https://t.co/vopG1HUAOG #Greece #economy #euro pic.twitter.com/mkw2DWmHbc | Greek Q4 GDP contracts 0.6 pct QoQ, recession of 0.7 pct in 2015 https://t.co/vopG1HUAOG #Greece #economy #euro pic.twitter.com/mkw2DWmHbc |
| The news came as protesting farmers clashed with riot police in Athens, as part of a major demonstration against austerity measures. | The news came as protesting farmers clashed with riot police in Athens, as part of a major demonstration against austerity measures. |
| Germany, the eurozone’s largest economy, grew by 0.3% in the last quarter. Domestic demand was solid, but foreign trade had a negative impact on growth with exports falling faster than imports. | Germany, the eurozone’s largest economy, grew by 0.3% in the last quarter. Domestic demand was solid, but foreign trade had a negative impact on growth with exports falling faster than imports. |
| Related: Market turmoil: Stocks rally despite Greece falling back into recession - live updates | |
| The country was affected by the slowdown in the global economy, according to Anna Zabrodzka, economist at Moody’s Analytics. | The country was affected by the slowdown in the global economy, according to Anna Zabrodzka, economist at Moody’s Analytics. |
| Zabrodzka said: | Zabrodzka said: |
| The slowdown in emerging markets, particularly China, has dampened external demand for German products. The upside should come from the weaker euro, which should partially mitigate soft external demand | The slowdown in emerging markets, particularly China, has dampened external demand for German products. The upside should come from the weaker euro, which should partially mitigate soft external demand |
| Carsten Brzeski of ING fears that Germany could struggle in 2016. | Carsten Brzeski of ING fears that Germany could struggle in 2016. |
| “On top of the well-known risk factors like slowing China and emerging markets or a still struggling eurozone, low oil prices and the possible weakness of the US economy could give the German economy a hard time,” he said. | “On top of the well-known risk factors like slowing China and emerging markets or a still struggling eurozone, low oil prices and the possible weakness of the US economy could give the German economy a hard time,” he said. |
| “In particular, any slowdown of the US economy could turn out to be a double whammy for Germany.” | “In particular, any slowdown of the US economy could turn out to be a double whammy for Germany.” |
| Portugal only grew by 0.2% in the last quarter, down from 0.4% in the third quarter. That’s a blow to Lisbon’s new leftwing government, as it tried to unwind some of the austerity measures implemented by its predecessors. | Portugal only grew by 0.2% in the last quarter, down from 0.4% in the third quarter. That’s a blow to Lisbon’s new leftwing government, as it tried to unwind some of the austerity measures implemented by its predecessors. |
| Italy was the big disappointment, with expansion slowing to just 0.1% against predictions of 0.3% growth. Italian growth has slowed steadily through 2015, since managing growth of 0.4% in the first three months. | Italy was the big disappointment, with expansion slowing to just 0.1% against predictions of 0.3% growth. Italian growth has slowed steadily through 2015, since managing growth of 0.4% in the first three months. |
| 0.4% => 0.3% => 0.2% => 0.1%...(Q1) (Q2) (Q3) (Q4)#Italy's QoQ GDP growth in 2015 not looking particularly auspicious. | 0.4% => 0.3% => 0.2% => 0.1%...(Q1) (Q2) (Q3) (Q4)#Italy's QoQ GDP growth in 2015 not looking particularly auspicious. |
| Ouch. Italy real GDP growth up by just 0.1% qoq in the final quarter of last year. | Ouch. Italy real GDP growth up by just 0.1% qoq in the final quarter of last year. |
| And Finland, one of the most fervent supporters of austerity during the debt crisis, is also still shrinking. GDP fell by 0.1% in the last quarter. | And Finland, one of the most fervent supporters of austerity during the debt crisis, is also still shrinking. GDP fell by 0.1% in the last quarter. |
| The Netherlands expanded by 0.3%, while the Spanish economic recovery continued with growth of 0.8%. That made Spain the only large EU member to grow faster than Britain, which posted growth of 0.5%. | The Netherlands expanded by 0.3%, while the Spanish economic recovery continued with growth of 0.8%. That made Spain the only large EU member to grow faster than Britain, which posted growth of 0.5%. |
| Holger Sandte of Nordea Markets warned that the eurozone faced “big risks” this year, if the recent stock market turmoil fed through to the real economy. | Holger Sandte of Nordea Markets warned that the eurozone faced “big risks” this year, if the recent stock market turmoil fed through to the real economy. |
| He said: | He said: |
| We currently pencil in GDP growth of 0.3% q/q for Q1. The big question is how much the turmoil on financial markets will weigh on growth. The wealth effect may not be very strong in the euro area, but it is still negative. | We currently pencil in GDP growth of 0.3% q/q for Q1. The big question is how much the turmoil on financial markets will weigh on growth. The wealth effect may not be very strong in the euro area, but it is still negative. |
| “Moreover, the euro is about to strengthen which dampens both exports and inflation. On top of that, problems in the banking sectors might mean that bank lending soon will decline before long.” | “Moreover, the euro is about to strengthen which dampens both exports and inflation. On top of that, problems in the banking sectors might mean that bank lending soon will decline before long.” |
| Euro area #GDP in Q4 okay but that is the look in the rear mirror. Big risks ahead https://t.co/lV9rkguwbd pic.twitter.com/QLLx8BjRAQ | Euro area #GDP in Q4 okay but that is the look in the rear mirror. Big risks ahead https://t.co/lV9rkguwbd pic.twitter.com/QLLx8BjRAQ |
| IHS’s Howard Archer also warned that the eurozone figures could be disappointing this year. | IHS’s Howard Archer also warned that the eurozone figures could be disappointing this year. |
| We have been expecting eurozone GDP growth to improve modestly to 1.7% in 2016, but this is currently looking ever more questionable and may well need to be revised down. | We have been expecting eurozone GDP growth to improve modestly to 1.7% in 2016, but this is currently looking ever more questionable and may well need to be revised down. |
| “There are clearly mounting downside risks to the eurozone growth outlook coming from global growth problems and financial market weakness and volatility.” | “There are clearly mounting downside risks to the eurozone growth outlook coming from global growth problems and financial market weakness and volatility.” |
| European stock markets rallied on Friday morning, after days of heavy losses. The Stoxx 600 index has shed 15% of its value this year, with bank shares hitting their lowest levels since the 2008 financial crisis. | European stock markets rallied on Friday morning, after days of heavy losses. The Stoxx 600 index has shed 15% of its value this year, with bank shares hitting their lowest levels since the 2008 financial crisis. |