From north to south, euro zone economy steams into 2017

LONDON: The euro zone economy has kicked off the year robustly, data from the Baltic to the Mediterranean showed, evidence for the European Central Bank that its massive cash stimulus is working but also posing questions about what comes next.

There are risks ahead – some economic, some political – but for now the 19 member states of the euro zone are doing better than many expected.

German inf lation came in strongly if slightly below the economic consensus.

At 1.9 per cent year-on-year, it was the highest since July 2013 and basically spot on the ECB’s just-under 2 per cent target for the euro zone as a whole.

Spain, the euro zone’s fourth largest economy, reported its output grew last year at 3.2 per cent, adding to 3.2 per cent and 1.4 per cent in the previous two years and signalling a strong recovery from a bankingdebt crisis and a recession.

Manufacturing confidence in the Netherlands – the fifth largest economy – hit its highest level since 2008.

The Dutch central bank then underlined the mood by raising its growth forecast for 2017 to 2.3 per cent from 1.9 per cent.

Various economic sentiment indexes for the euro zone as a whole came in better than expected.

Bloc-wide economic sentiment, for example, hit a near six-year high.

Less heralded were signs of growth among the currency bloc’s smaller economies – Lithuania’s year-on-year GDP was 3.0 per cent in the fourth quarter and Latvia’s came in at 2.1 per cent, while Austrian inflation accelerated and its purchasing managers’ index soared.

The data comes after a week in which other reports showed relatively strong performances continuing into this year from 2016 for heavyweights Germany and France. — Reuters