The Pak Banker

Euro zone economic muscle weak as global storm gathers

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BERLIN: The euro zone economy notched up modest growth in the final three months of last year, showing the bloc has little muscle to shrug off the globe's mounting economic problems. After a week where stock markets around the world plunged, the 19 countries using the euro failed to lift the gloom with data showing that growth of its gross domestic product was just 0.3 percent in each of the final two quarters of 2015.

This will add to pressure on the European Central Bank to ramp up its 1.5-trillion-euro money printing scheme to buy chiefly government bonds when governors meet in March. Having spent much of their firepower, however, options are limited. The picture varied across the euro zone, which spans economical­ly strong countries such as Germany in the north to Greece or Portugal in the south, both of which required financial rescues. The bloc's biggest member, Germany, posted steady economic growth in the final quarter of 2015, as higher state spending to cope with an influx of refugees and constructi­on offset a drag from foreign trade.

Yet, Italy barely grew during the same period as domestic demand was slow. Economic output edged up a quarterly 0.1 percent at the end of last year. "This is a weak recovery," said Carsten Brzeski, an economist with ING. "The risk is that low growth means unemployme­nt remains high and that anti euro parties gain momentum." The European Union's statistics office Eurostat said gross domestic product rose 0.3 percent quarteron-quarter in the last three months of last year, the same as between July and September.

Year-on-year, the euro zone economy expanded 1.5 percent, also as forecast by economists. Yet the final six months of 2015 lagged the start. The data painted a bleaker picture for European industry, from car-making to mining. Industrial output fell 1 percent month-on-month in December - a 1.3 percent year-on-year fall. This was worse than expected by economists who had predicted a 0.3 percent monthly rise and a 0.8 percent annual increase in production.

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