Solid growth in powerhouse Germany kept the eurozone economy steady in late 2015 despite the buffeting from global market turmoil and a sharp slowdown in China, data showed yesterday, but the outlook is clouded.
Analysts said the figures were “something of a relief” after recent weakening data had suggested a modest recovery in the 19-nation single currency bloc was running out of steam.
The Eurostat statistics agency said the eurozone grew 0.3% in the last three months of 2015, the same pace as in the previous quarter and in line with analyst forecasts.
German gross domestic product (GDP) growth, at 0.3%, offset weaker performances from southern countries by virtue of its sheer size.
“The economic situation in Germany was characterised by solid and continuous growth in 2015,” federal statistics office Destatis said.
France slowed to 0.2% from 0.3% in the fourth quarter.
The Italian recovery stalled, with just 0.1% growth after 0.2%, complicating Italy’s efforts to start reducing its €2.2tn ($2.5tn) debt mountain this year.
“Italy is still struggling to emerge from the great recession of 2008-14 and despite some encouraging signs in the first part of 2015, growth lost momentum in the second half,” said Lorenzo Codogno, chief economist at LC Macro Advisors.
Spain, meanwhile, led the pack with another gain of 0.8%.
Bailed out Greece fell back into recession as its economy contracted by 0.6%, however, that was a distinct improvement from a 1.4% contraction the previous quarter.
Athens remains saddled with a huge mountain of debt and it is struggling to meet the tough terms laid down in a third debt rescue agreed with its international creditors last year.
But despite the positive fourth-quarter headline figure, the report also pointed up the risks and the European Central Bank, which has launched an unprecedented €1tn stimulus programme, may have to do even more to get the economy back on track, they said.
For all 2015, it expanded 1.5%, coming in short of the 1.6% estimate given by the European Commission last week.
Outside the eurozone, Britain rose to a 0.5% quarterly expansion from 0.4%.
For the full 28-nation European Union, the economy gained 0.3% in the fourth quarter, down from 0.4% in the third, and expanded 1.8% for the year.
Howard Archer at IHS Global Insight said that while the 2015 growth rate of 1.5% was the best since 2011, the fourth-quarter performance was only “lacklustre” and the outlook was not promising.
“We have been expecting eurozone growth to improve modestly to 1.7% in 2016 but this is currently looking ever more questionable and may well need to be revised down,” Archer said in a note.
“There are clearly mounting downside risks to the eurozone growth outlook coming from global growth problems and financial market weakness and volatility,” he said.
Other analysts were equally guarded. “The fact that eurozone growth did not slow in the fourth quarter provides little comfort in the current environment of global market turmoil and does not preclude the need for further decisive policy action from the ECB,” Capital Economics said.
Capital Economics even warned that it may have to cut its already low 1.2% growth forecast for this year. “We have pencilled in growth of 1.2% in 2016 but the recent turmoil in global financial markets and signs of renewed stress in peripheral eurozone (countries) have increased the downside risks even to our forecast,” it said.