Euro-zone econ­omy cools in third quar­ter

Quar­terly growth be­low forecast

Kuwait Times - - BUSINESS -

BRUSSELS: Growth in the 19-na­tion eu­ro­zone slowed to 0.3 per­cent in the third quar­ter, of­fi­cial data showed yes­ter­day, with the econ­omy in pow­er­house Ger­many cool­ing as France re­turned to ex­pan­sion. The quar­terly growth was be­low the an­a­lyst es­ti­mate of 0.4 per­cent for the pe­riod and will fuel spec­u­la­tion the Euro­pean Cen­tral Bank will ex­pand its vast stim­u­lus pro­gram next month.

The Euro­stat agency said the euro-zone econ­omy ex­panded more slowly than the 0.4 per­cent seen in the pre­vi­ous quar­ter and is in line to grow by 1.6 per­cent over the next 12 months. “Bot­tom line: the Euro-zone re­cov­ery is con­tin­u­ing, but it seems like driv­ing with the hand­brake on,” said Peter Van­den Houte, an­a­lyst at Dutch lender ING.

“With the emerg­ing coun­tries still in the dol­drums, lit­tle ac­cel­er­a­tion is to be ex­pected in the com­ing quar­ters,” he said, adding that the fig­ures were too weak “to de­ter the ECB from go­ing ahead” with more stim­u­lus.

The slight slow­down was ac­cen­tu­ated by a stalling Ger­many econ­omy which also grew by a slower 0.3 per­cent, caught by fall­ing de­mand from China and the Volk­swa­gen pol­lu­tion scan­dal.

Ex­port-de­pen­dent Ger­many has seen weak­ened in­vest­ment and a spike in un­cer­tainty af­ter a huge emis­sions scan­dal en­gulfed auto gi­ant Volk­swa­gen, Ger­many’s land­mark com­pany. was a slow­down from 1.0 per­cent in the pre­vi­ous three-month pe­riod.

An­a­lysts agreed that the slow­down in emerg­ing economies led by China un­der­mined any ben­e­fit of a weaker euro that has fallen by about 20 per­cent in the past year against the dol­lar.

“Softer ex­ter­nal de­mand ap­pears to have muted any ben­e­fi­cial im­pact on ex­ports from the lower euro,” Jonathan Loynes, Chief Euro­pean Econ­o­mist at Cap­i­tal Eco­nomics.

“We have long warned that growth could slow fur­ther ahead as the tem­po­rary boosts from lower oil prices and the weaker euro start to fade,” he said. Pre­dictably, bailed-out Greece con­tracted sharply by 0.5 per­cent in the third quar­ter as the debt cri­sis and cap­i­tal con­trols this sum­mer threw the econ­omy into dis­ar­ray. Al­though Greece had a record tourism year, gains were lost to the chaos stem­ming from the six months bat­tle be­tween the left­ist gov­ern­ment of Alexis Tsipras and in­ter­na­tional cred­i­tors.

More wor­ry­ingly, the econ­omy in re­cov­ery stand­out Por­tu­gal slowed un­ex­pect­edly to a stand­still as do­mes­tic de­mand fell sharply. Across the whole 28-na­tion EU, the econ­omy ex­panded by 0.4 per­cent in the quar­ter, on course for 1.9 per­cent growth over 12 months. — AFP

COLOGNE: A file photo of con­tain­ers are stacked at the har­bor in Cologne, Ger­many. The eu­ro­zone eco­nomic re­cov­ery lost mo­men­tum in the third quar­ter of the year, of­fi­cial fig­ures showed yes­ter­day, a de­vel­op­ment that’s set to pile fur­ther pres­sure on the Euro­pean Cen­tral Bank to ex­pand its mon­e­tary stim­u­lus. —AP

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.