Summary: Euro-zone GDP contracts in December quarter; result better than expected but annual rate falls further into negative territory; Europe lagging global recovery cycle; “double-dip” likely.
Euro-zone GDP growth has been lacklustre at best since the GFC and the European debt crisis of 2011/12. Despite exceptionally loose monetary policy, euro-zone GDP growth averaged less than 0.5% per quarter from the beginning of 2013 to the end of 2019. In 2020, GDP growth collapsed in the March and June quarters before rebounding strongly in the September quarter.
According to the latest figures released by Eurostat, euro-zone GDP contracted by 0.7% in the December quarter on a seasonally and calendar adjusted basis. The figure was better than the -0.9% which had been generally expected but in stark contrast to the September quarter’s 12.4% expansion. On an annual basis, GDP contracted by 5.1%, down from -4.3% in the September quarter.
NAB currency strategist Rodrigo Catril said the result was “thanks to better performances by France and Spain, with Germany in line.”
