Eurozone steams into 2017

london — The eurozone economy has kicked off the year robustly, data showed on Monday, presenting the European Central Bank with evidence that its massive cash stimulus is working but also posing difficulties about the way forward.

There are risks ahead — some political — but for now the 19 member states of the eurozone are doing better than many expected.

German inflation looks set to come in strongly after five federal states clocked up annual price rises close to — and in three cases above — the ECB’s just-under two per cent target for the eurozone as a whole.

Spain, the eurozone’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, signalling strong recovery from a banking-debt crisis and a recession.

Manufacturing confidence in the Netherlands — the fifth largest economy — hit its highest level since 2008, while various economic sentiment indexes for the eurozone as a whole came in much better than expected.

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

Less heralded, there were also 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, 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.

“2017 seems to have started on a very solid footing,” said Jennifer McKeown, chief European economist at Capital Economics in London. “The economy is performing (well).” —