Preliminary EU growth data suggests that economic activity in the 19-nation eurozone was cooling slightly in the third quarter, dragged down by lower output expansion in its biggest economy, Germany.
Preliminary economic data released by Germany’s statistics office, Destatis, on Friday showed that the pace of activity in Europe’s biggest economy slowed to 0.3 percent in the third quarter.
Compared with previous quarters this was 0.1 percent less than in the second quarter and the same as in the first three months of the year.
Destatis said growth was primarily sustained by higher private and state spending, while business investment in capital goods and equipment had slowed in the period. Growth was also negatively impacted by foreign trade, which saw imports rise “significantly stronger” than exports, Destatis added.
ING chief economist Carsten Brzeski warned that the new GDP data were no relief.
“They only show that consumption on the back of low interest rates, a strong labor market, low inflation and higher wages is still able to offset industrial and export weakness,” he told the news agency AFP. “In fact, the summer weakness of the German industry seems to be more substantial than only a vacation-driven soft spell.”
But Berenberg analyst Holger Schmieding disagrees, claiming the slight downturn was the result of German growth shifting away from exports toward a more balanced mix.
“With buoyant private consumption and a modest fiscal stimulus, domestic demand is rising nicely,” he wrote. Schmieding also believes that the refugee influx could lead to extra public spending that could contribute to a fiscal boost of 0.6 percent of output next year.
As questions arise over the health of the German economy, neighboring France posted a return to growth in the third quarter with an expansion of 0.3 percent after having stalled in the previous quarter.
Finance Minister Michel Sapin said the latest figures meant that France’s economy would grow “by at least 1.1 percent” for 2015 as a whole, adding he believed the country had “exited the period of extremely weak growth that had lasted too long.”
France’s upswing, however, wasn’t enough to stop the slide in eurozone growth, which slipped to 0.3 percent between July and September – down from 0.4 percent in the previous quarter and 0.5 percent in the first three months of the year.
Among the eurozone growth laggards were Greece and Estonia whose gross domestic product (GDP) shrunk by 0.5 percent, with Finland faring even worse at a rate of contraction of 0.6 percent.
By contrast, the eurozone’s third largest economy, Italy, gathered momentum, rising 0.2 percent, while Spain added a staggering 0.8 percent in output, showing renewed strength after years of recession.
uhe/pad (dpa, AFP, Reuters)