Eurozone GDP surprises on the upside

Eurozone economic growth accelerated in the third quarter, official data showed on Wednesday, beating expectations.

According to flash estimates from Eurostat, the statistical office of the European Union, seasonally-adjusted GDP grew by 0.4% in the third quarter. In the wider bloc it grew by 0.3%.

That compares to second-quarter growth of 0.2% and 0.3% in the two areas respectively.

Analysts had expected Eurozone GDP growth to be closer to 0.2%.

Among member states, Germany – the region’s biggest economy – saw GDP lift 0.2%, better than most analysts had expected. In the second quarter, German GDP fell 0.3%.

Spain reported a 0.8% increase and France an 0.4% uptick, boosted by the summer Olympics. In contrast, Italy’s growth was flat.

Ireland saw the biggest growth, at 2%. However, Irish GDP is affected by multinational accounting activity and is notoriously volatile.

Year-on-year, GDP grew by 0.9% in both the Eurozone and wider EU.

Bert Colijn, chief economist, Netherlands, at ING, said: “PMIs have been indicating doom and gloom about the Eurozone economy since May, but third-quarter GDP has come in surprisingly strong.

“The acceleration from 0.2% to 0.4% indicates that worries about an imminent recession are overdrawn.

“Still, don’t overestimate the strength on the basis of this better-than-expected growth reading either.”

Rabobank said: “There’s a stark divergence between the manufacturing and services sector. Industrial performance also varies widely between member states.

“All-in-all, today’s key message from the figures is that the slow but gradual recovery remains intact, even as structural challenges in industry and sluggish external demand are likely to keep a lid on the pace of expansion in coming quarters, with the fourth likely to show a fall back in growth after the third quarter uptick.”