Rising exports and a gradual improvement in investments were behind the eurozone’s stronger-than-expected growth in the last quarter of 2013, data showed yesterday.

The €9.5-trillion economy rose by 0.3 per cent in the October-to-December period, a figure that compared to 0.1 per cent growth in the previous three months, the European Union’s statistics office Eurostat said.

The fourth-quarter expansion came on the back of a 1.2 per cent rise in exports in the period and a 1.1 per cent rise in investments.

The improving economic outlook provides some breathing space for the European Central Bank before today’s policy meeting. The ECB is expected to show how it wants to fight disinflation pressures that could threaten the recovery.

Compared with the same period last year, the eurozone’s economy rose 0.5 per cent in the fourth quarter, returning to annual growth for the first time in two years.

Europe’s biggest economy, Germany, showed a robust 0.4 per cent expansion in the fourth quarter, when compared with the previous three months, and growth of the second largest economy France accelerated to 0.3 per cent after being flat in third quarter.

The European Commission said last month it expects Germany to accelerate away from France and Italy in 2014 as the eurozone economy gradually recovers from its worst crisis.

In a departure from the gloom of recent years, Brussels slightly increased its growth prediction for the bloc’s economy to 1.2 per cent this year from an earlier 1.1 per cent.

A separate data release yesterday showed a much stronger rebound in retail sales in January. The eurozone’s volume of retail sales jumped 1.6 per cent on the month after a revised 1.3 per cent drop in December.

Germany saw a 2.5% monthly jump in January

Compared with the same period last year, there was a 1.3 per cent growth in January, following a revised 0.4 per cent drop in December.

Analysts polled by Reuters expected a 0.8 per cent rise on the month.

Germany saw a 2.5 per cent monthly jump in January and France booked a 1.2 per cent rise.

Despite a gradual pick-up in growth, household demand across the eurozone remains weak as the bloc suffers from near record unemployment, notably among young Europeans, keeping a lid on Europeans’ spending.

But in a sign of the improving situation in southern Europe, Portugal witnessed a 6.7 per cent rise in volume of retail sales in January, when compared with December.