Euro-area economic growth slows as exports, consumption cool
The euro area’s nascent recovery from a record-long recession nearly stalled in the third quarter as exports and household consumption cooled.
Gross domestic product rose 0.1 percent after a 0.3 percent gain in the previous three months, the European Union’s statistics office in Luxembourg said on Wednesday. That’s in line with Eurostat’s initial estimate. From a year earlier, the economy contracted 0.4 percent.
The European Central Bank cut its main refinancing rate to a record-low 0.25 percent on Nov. 7, based in part on its forecast for “continued, albeit modest, growth in the second half of the year.” The ECB predicts the euro-area economy will contract 0.4 percent this year before growing 1 percent in 2014. It will release new forecasts on Thursday.
“There’s no sign in the incoming data that growth is accelerating in the fourth quarter,” said Elga Bartsch, chief European economist at Morgan Stanley & Co. in London. “We are concerned Europe will lack an engine of growth; we are worried about the core — France, the Netherlands and Germany.”
Exports from the euro area grew 0.2 percent after a 2.1 percent gain in the second quarter, Wednesday’s report showed. Imports expanded 1 percent, down from 1.6 percent, and household consumption growth slipped to 0.1 percent from 0.2 percent in the previous three months.
French GDP fell 0.1 percent in the third quarter as President Francois Hollande failed to revive investment in the face of heavy tax burdens. Growth in Germany, Europe’s largest economy, slowed to 0.3 percent after a 0.7 percent expansion in the second quarter and the Dutch economy grew 0.1 percent.
The euro-area economy will expand 0.2 percent in the fourth quarter and 0.3 percent in the first three months of 2014, according to Bloomberg’s monthly survey of economists.
Policy makers meeting in Frankfurt on Thursday will leave the ECB’s benchmark rate unchanged at 0.25 percent, according to all 60 economists in a Bloomberg News survey.
Even as economic confidence rose to the highest in more than two years in November, the 17-nation currency bloc is still struggling with the legacy of a debt crisis now in its fifth year. Unemployment remained near a record high in October and industrial production dropped more than forecast in September.
Air Berlin Plc, Europe’s third-biggest discount carrier, last month scrapped its profit target as efficiency measures fail to offset low demand that the airline predicts will continue into 2014. “Given the weak demand and the unabated intense competitive environment, even further price erosion is apparent for the current winter half-year,” Chief Executive Officer Wolfgang Prock-Schauer said.
[Bloomberg]
