Eurozone economic growth halved in the third quarter amid global trade disputes, Italy’s budget chaos and problems in the automotive industry.
Gross domestic product expanded only 0.2 percent sequentially after rising 0.4 percent in the second quarter, preliminary flash estimate from Eurostat showed Tuesday.
The economy logged its weakest expansion in four years, while economists had forecast the growth rate to remain at 0.4 percent.
Year-on-year, GDP growth slowed to 1.7 percent from 2.2 percent in the preceding period and below the forecast of 1.8 percent. Revised data is due on November 14.
While the 0.2 percent expansion in the euro-zone economy was disappointing, it probably in part reflects temporary factors, Jessica Hinds, an economist at Capital Economics, said. Hinds expects some recovery in the coming quarters.
The economist noted that the recent run of weak data will discourage the European Central Bank from giving any firmer evidence about the timing or pace of future interest rate hikes for now.
ECB President Mario Draghi last week said the euro area economic recovery is proceeding along its solid and broad-based path despite prominent uncertainties linked to the global trade such as the threat of protectionism.
Among major economies, France’s growth doubled to 0.4 percent in the third quarter from 0.2 percent in preceding period, largely driven by domestic demand and exports.
Meanwhile, Italy’s economy stagnated in the third quarter, following second quarter’s 0.2 percent growth.
Elsewhere, survey data from the European Commission revealed further deterioration in economic sentiment in Eurozone due to weaker confidence in industry, services and, particularly, retail trade.
The economic sentiment index slid to 109.8 in October from 110.9 a month ago. This was the lowest since May 2017, when the score was 109.0.
The industrial sentiment index fell to 3.0 from 4.7 in the previous month reflecting managers’ worsened assessments of the stocks of finished products and the current level of overall order books.
Likewise, the services confidence index came in at 13.6, down from 14.7 a month ago. The decrease was due to a deterioration in all its components, namely managers’ demand expectations, their appraisals of the past business situation and of past demand.
Meanwhile, the consumer sentiment index rose to -2.7, in line with flash estimate, from -2.9 in September.
At the same time, the retail trade confidence index declined to -0.8 from +2.4 in the previous month. This significant deterioration was caused by managers’ much grimmer views on the present and expected business situation.
Construction confidence remained virtually flat, resulting from a combination of improved employment expectations and more cautious assessments of the level of order books.
Another survey from EU showed that business confidence in the currency bloc deteriorated on managers’ appraisals of their overall and export orders books and their assessments of past production and the stocks of finished products.
The business climate index dropped to 1.01 in October from 1.21 in September.
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