Deprecated: Function get_magic_quotes_gpc() is deprecated in /home2/sharonox/public_html/wp-includes/formatting.php on line 1828

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home2/sharonox/public_html/wp-includes/formatting.php on line 3603

Eurozone GDP Up 0.3% In Q3

By Arthur Greene December 6, 2016
260abl4

Eurozone economic growth stabilized as initially estimated in the third quarter, data from Eurostat showed Tuesday. Gross domestic product expanded 0.3 percent sequentially in the third quarter, the same pace of growth as seen in the second quarter, while there was a small upward revision in annual growth to 1.7% from the previous estimate of 1.6% and the annual rate has held at 1.7% for the past three quarters.

By component, household final consumption expenditure in the euro area increased by 0.3% in the third quarter, while gross fixed capital formation grew by 0.2% at the same time.

Exports and imports in the Eurozone edged up 0.1% and 0.2%, respectively over the same period.

Bert Colijn, Senior Economist at ING, suggests that the weakest export growth of Eurozone since 2011 and sluggish investment indicate Brexit impact and provide further argument for the ECB to extend as political uncertainty is likely to remain significant in 2017. Saying;

Investment growth dropped to 0.2% QoQ in Q3, which was the weakest growth in more than a year. Exports grew at just 0.1% QoQ - the weakest pace since 4Q11 - resulting in a negative contribution from net exports to GDP growth. This provides evidence for the view that Brexit did have an immediate impact on the Eurozone economy as businesses held off investment decisions given the political uncertainty and the uncertainty about trade rules with the UK.”

 “For the ECB, this breakdown of growth by components shows that political risk is indeed to be taken seriously as investment and exports have been impacted by the Brexit shock. Moving ahead, that will provide further argument for an untapered extension of the QE program as political uncertainty is likely to remain strong in 2017. We expect the ECB to announce an extension of three to six months on Thursday.”

The data will not have a significant impact on near-term policy trends. The crucial element will be whether the Eurozone economy can break out of the underlying weak growth trend under the influence of a very accommodative monetary policy. There is tentative evidence that there will be a significant acceleration for the fourth quarter of 2016, which would underpin confidence in the outlook.

Following the release of Eurozone GDP data for the third quarter at 5:00 am ET Tuesday, the euro changed little against its major rivals. The euro was trading at 1.0768 against the greenback, 122.87 against the yen, 1.0839 against the franc and 0.8445 against the pound around 5:03 am ET.

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home2/sharonox/public_html/wp-includes/formatting.php on line 1828

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home2/sharonox/public_html/wp-includes/formatting.php on line 3603
By Arthur Greene December 6, 2016

Latest from MarketsDaily