Four-year low for eurozone as economic growth in US strengthens
Limited options: Shweta Singh THE eurozone economy expanded at its slowest pace in more than four years, according data released yesterday.
The rate of growth in the third quarter of this year halved from the pace of the first half of the year to just 0.2%, dragged down by near-stagnation in Italy and a likely weaker performance in Germany.
The zone grew 1.7% from a year earlier, far slower than expected.
It posted growth of 2.7% for all of 2017, its fastest expansion in the decade since the financial crisis, which had sparked hopes Europe was set for a sustained upturn.
The weak growth highlighted the stark difference between Europe and the US since 2007.
The latest data showed the world’s largest economy grew 3.5% in the third quarter.
Europe’s poor performance also cast doubt over whether the European Central Bank would manage to raise interest rates at all before the next downturn set in.
By contrast, the US Federal Reserve has raised interest rates eight times in the past three years and will have more room to stimulate the economy with cuts should a downturn occur.
“The divergence in economic performance within the euro area is also increasing, limiting the ECB’s options,” said Shweta Singh from London-based advisory firm TS Lombard.
“The central bank will likely downgrade its growth assessment in December and adopt a more dovish end to its quantitative easing programme than previously expected.”
The euro area’s overall performance was hit by growth of just 0.02% in Italy in the quarter.