Euro zone growth set to best in decade

Jerusalem Post - - BUSINESS & FINANCE - • By JAN STRUPCZEWSKI

BRUS­SELS (Reuters) – The euro zone’s an­nual eco­nomic growth rate out­stripped that of the United States in the third quar­ter set­ting up 2017 as the best year for the cur­rency area since fi­nan­cial mar­kets crashed a decade ago.

Ger­many was a ma­jor fac­tor, but even some of the bloc’s lag­gards, such as Italy, showed signs of re­vival.

Euro­stat, the Euro­pean Union statis­tics of­fice, con­firmed a pre­lim­i­nary es­ti­mate that euro zone gross do­mes­tic prod­uct (GDP) grew 0.6% from July to Septem­ber from the pre­vi­ous quar­ter and on a year on year ba­sis was 2.5% higher.

This was higher than the 2.3% year-on-year rate for the US econ­omy, which had been grow­ing faster than the euro zone. The US quar­terly num­bers were slightly bet­ter than the euro zones at 0.7%, how­ever.

“A ro­bust la­bor mar­ket re­cov­ery, grow­ing ex­port mar­kets, an ac­com­moda­tive mone­tary stance, im­prov­ing lend­ing con­di­tions and mod­est in­fla­tion are but a few of the tail­winds that the euro zone econ­omy is ex­pe­ri­enc­ing,” ING econ­o­mist Bert Colijn said.

“Be­cause of that, this could well be its strong­est year for growth since 2007. The euro zone will likely out­pace both the US and UK in terms of GDP growth in 2017,” he said.

Euro zone GDP grew 3.0% in 2007, and reached 2.1% in 2010 and 2015.

Partly as a re­sult of the growth, euro zone in­vest­ments have turned in one of their best years since the sin­gle cur­rency was born in 1999, con­found­ing many who had bet on the bloc to be the dis­as­ter play of 2017.

The strong euro zone growth was pow­ered by the big­gest econ­omy Ger­many, which shifted into an even higher gear in the third quar­ter, pro­pelled by buoy­ant ex­ports and ris­ing com­pany in­vest­ments in equip­ment.

Sea­son­ally ad­justed Ger­man GDP rose 0.8% on the quar­ter, beat­ing a con­sen­sus fore­cast of 0.6%, which was also the sec­ond-quar­ter growth rate.

Sec­ond big­gest France grew 0.5% on the quar­ter and 2.2% in an­nual terms and the third big­gest Italy beat ex­pec­ta­tions with a 0.5% quar­terly, and 1.8% an­nual growth, sup­ported by ex­ports and do­mes­tic de­mand.

The Netherlands, the fifth big­gest econ­omy, grew an ex­pected 0.4% on the quar­ter af­ter a record jump of 1.5% in the pre­vi­ous three months, putting it on track for a 3.3% ex­pan­sion this year, the strong­est since 2007.

Out­side the bloc, euro zone growth also ex­ceeded that of Bri­tain, the EU’s sec­ond-ranked econ­omy which will leave the bloc in March 2019.

The Bri­tish econ­omy, af­fected by a drop in the pound against the euro since last year’s Brexit vote, ex­panded 0.4% on the quar­ter in ster­ling terms and just 1.5% an­nu­ally.

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