Eurozone economy grows faster than expected in Q3
Preliminary data released by Eurostat on Thursday (October 30) showed that the euro zone economy grew by 0.2% in the third quarter, slightly higher than market expectations of 0.1%.
On an annual basis, the euro zone economy grew by 1.3%, higher than the expected 1.2% and close to the "natural growth rate" that economists believe can be achieved without stimulus.
Eurozone Q3 economic growth was mainly driven by Spain and France. Spain achieved an expansion of 0.6% in the quarter, while France still recorded a growth of 0.5% despite political turmoil (far exceeding analysts' expectations of 0.2%).
However, Germany and Italy have dragged down the overall growth rate, with both countries' economies stagnating.
Previously, the euro zone economy grew by 0.6% in the first quarter and slowed to 0.1% in the second quarter.
"While there are still significant downside risks to the outlook, market sentiment towards the economy is generally relatively positive at the moment," said Bert Colijn, an economist at ING. "We expect growth to gradually accelerate in the next year, but it still needs to be viewed with caution. It is not appropriate to regard this as an outbreak period of economic recovery."
While factors such as trade tensions and external uncertainty are likely to continue to weigh on growth in the coming months, economists overall remain relatively optimistic. The European Central Bank's forecast also shows that the third quarter may be the weakest quarter in recent times.
However, economists also pointed out that the rigid economic structure of the Eurozone has limited overall vitality. Therefore, even if growth picks up, it will be relatively moderate, and the growth rate in the next few years will most likely hover between 1.2% and 1.5%.
On an annual basis, the euro zone economy grew by 1.3%, higher than the expected 1.2% and close to the "natural growth rate" that economists believe can be achieved without stimulus.
Eurozone Q3 economic growth was mainly driven by Spain and France. Spain achieved an expansion of 0.6% in the quarter, while France still recorded a growth of 0.5% despite political turmoil (far exceeding analysts' expectations of 0.2%).
However, Germany and Italy have dragged down the overall growth rate, with both countries' economies stagnating.
Previously, the euro zone economy grew by 0.6% in the first quarter and slowed to 0.1% in the second quarter.
"While there are still significant downside risks to the outlook, market sentiment towards the economy is generally relatively positive at the moment," said Bert Colijn, an economist at ING. "We expect growth to gradually accelerate in the next year, but it still needs to be viewed with caution. It is not appropriate to regard this as an outbreak period of economic recovery."
While factors such as trade tensions and external uncertainty are likely to continue to weigh on growth in the coming months, economists overall remain relatively optimistic. The European Central Bank's forecast also shows that the third quarter may be the weakest quarter in recent times.
However, economists also pointed out that the rigid economic structure of the Eurozone has limited overall vitality. Therefore, even if growth picks up, it will be relatively moderate, and the growth rate in the next few years will most likely hover between 1.2% and 1.5%.
German economic growth has basically stalled
Germany has essentially stagnated over the past three years, with the country's industrial competitiveness declining. However, the German government's massive fiscal spending plan is expected to boost growth to some extent.
However, it may take months or even quarters for these expenditures to actually flow into the real economy, and there is still a risk of sluggish growth in the short term.
"Leading indicators, including the IFO business sentiment survey and PMI index, suggest that the German economy will begin to recover in the fourth quarter, but initial momentum will remain weak, which is related to geopolitics, trade uncertainty and negative perceptions of the new government's early work," said Timo Klein, an economist at S&P Global Market Intelligence.
Germany has essentially stagnated over the past three years, with the country's industrial competitiveness declining. However, the German government's massive fiscal spending plan is expected to boost growth to some extent.
However, it may take months or even quarters for these expenditures to actually flow into the real economy, and there is still a risk of sluggish growth in the short term.
"Leading indicators, including the IFO business sentiment survey and PMI index, suggest that the German economy will begin to recover in the fourth quarter, but initial momentum will remain weak, which is related to geopolitics, trade uncertainty and negative perceptions of the new government's early work," said Timo Klein, an economist at S&P Global Market Intelligence.
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