Economic growth across the euro zone was stronger than expected at the end of 2013, according to official figures, raising hopes the recovery is gaining a foothold.
Gross domestic product grew by 0.3 per cent in the October-December period from the previous quarter, said Eurostat, the European Union’s statistics office. That amounts to an annualised rate of about 1.2 per cent.
In the third quarter, growth was only 0.1 per cent across the region.
“While still far from dynamic, it is a step back in the right direction,” said analyst Howard Archer of IHS Global Insight.
However, Jonathan Loynes, chief European economist at Capital Economics, warned economic growth “is likely to remain a long way short of the rates needed to tackle the problems of sky-high unemployment and crippling debt levels” in many of its countries.
“Accordingly, we don’t think the fourth quarter’s modest expansion precludes the urgent need for more policy action from the ECB,” he added.
Economic growth in Germany and France, the euro zone's two largest economies, marginally exceeded expectations in the fourth quarter to offer hope of a more robust 2014.
German growth accelerated to 0.4 per cent on the quarter thanks to a rise in exports and capital investment, up from 0.3 per cent in the previous three months.
The French economy expanded by 0.3 per cent and statistics office INSEE revised up the third quarter figure to flat from -0.1 per cent.
That meant France grew 0.3 per cent over the course of last year, more than the government’s estimate of 0.1 per cent.
Italy, now awaiting a new prime minister after Enrico Letta resigned today having been forced out by his own Democratic Party, dragged itself back to growth for the first time since mid-2011.
Its economy expanded marginally by 0.1 per cent. Over the whole of 2013, GDP contracted by 1.9 per cent, the ISTAT statistics office said.
Italy has been one of the world’s most sluggish economies for more than a decade. Growth has averaged less than zero over the last 12 years. In 2014, the government forecasts growth of 1.1 per cent.
The German Statistics Office saw “mixed signals” from the domestic economy, which has driven growth throughout most of the year, with public expenditure stable and private consumption slightly below the level of the previous quarter.
“Capital investment developed positively,” the Statistics Office said. “However, a strong reduction in inventories put the brakes on economic growth.”
Growth in the Netherlands was a strong 0.7 per cent, and the economies in crisis-hit countries like Spain and Portugal also showed new signs of life, growing by 0.3 per cent and 0.4 per cent.
The figures also showed the economy of the wider 28-nation EU, which includes members that don’t use the euro, grew by 0.4 per cent compared with the previous quarter.
For the whole of 2013, the figures showed the recovery was still at an early stage. The euro zone’s GDP fell 0.4 per cent, while the EU’s inched up 0.1 per cent.
Additional reporting: AP, Reuters
