Eurozone economic growth was slower than expected in the third quarter, preliminary data showed yesterday, increasing market expectations that the European Central Bank will step up its monetary stimulus to the economy next month.
The EU’s statistics office Eurostat said the gross domestic product of the 19 countries sharing the euro expanded 0.3 per cent quarter-on-quarter for a 1.6 per cent year-on-year increase in the July-September period.
Economists polled by Reuters had expected a 0.4 per cent quarterly rise and a 1.7 per cent annual increase.
“This outcome is also lower than the ECB’s staff projections, which would add to the already strong case for the ECB to step up monetary stimulus in December,” said Nick Kounis, head of macro and financial markets research at ABN AMRO bank.“If the ECB needed a final push to be decisive, this is it.”
He expected the ECB to step up the pace of its government bond-buying programme by €20 billion per month to €80 billion, a signal that such purchases would go on beyond September 2016, and expand the eligible universe of assets.
Economists said the slower third-quarter growth was likely to be a result of negative net trade with the rest of the world, which was clear in the case of Germany, France and Italy.
“This suggests that the benefit to eurozone exporters coming from the weak euro was offset by muted global growth,” said Howard Archer, economist at IHS Global Insight. “Meanwhile, relatively decent eurozone domestic demand supported imports.”
But Eurostat data showed that the eurozone had a seasonally unadjusted trade surplus of €20.5 billion in September with exports rising one per cent and imports falling one per cent year-on-year.
Aggregated eurozone growth was lower than expected mainly because growth in Italy, the Netherlands, Portugal and Finland all underperformed market expectations.
The eurozone’s two biggest economies, Germany and France, both grew in line with expectations at 0.3 per cent on a quarterly basis. But the third biggest Italy, with 0.2 per cent quarterly growth, fell short of expectations of a 0.3 per cent expansion and the Netherlands grew only 0.1 per cent against expectations of 0.3 per cent.