Quickview: Germany and Spain lift eurozone growth

Activity in the eurozone accelerated at the end of 2014 to boost hopes of an ongoing recovery in 2015

16 February 2015

Azad Zangana

Azad Zangana

Senior European Economist and Strategist

Aggregate quarterly eurozone GDP growth was better than expected in the fourth quarter, rising from 0.2% in the third quarter to 0.3%. For 2014 as a whole, the monetary union achieved 0.9% growth - the fastest rate of growth since 2011 and the European sovereign debt crisis. 

Within the individual member states, Germany and Spain both surprised on the upside as both recorded 0.7% growth on the quarter. Germany reported a rise in business investment, which had been depressed in previous quarters, probably in reaction to tensions between Europe and Russia. Germany also reported stronger net trade figures, as demand for its goods and services rose.  

Meanwhile, France met expectations by reporting 0.1% growth, although the figures mean a slowdown compared to the 0.3% growth posted in the previous quarter. The French statistics office reported a slight increase in consumer spending, but a continued contraction in investment. Like Germany, France also saw a positive contribution from net trade, driven by a rise in export volumes. Italy beat expectations by not contracting, albeit thanks to numerical rounding. GDP did however fall by €72 million, which technically keeps Italy in recession. 


There is a high chance that Greece will slip back into recession.

Outside of the big four, both Portugal and the Netherlands recorded another strong quarter with each seeing GDP rise by 0.5%. Finally, Greece, which had been reporting impressive growth at the start of 2014, ended the year by contracting (-0.2%). This means that there is a high chance that Greece will slip back into recession, especially after the huge uncertainty brought about by the election and subsequent bail-out dispute, which is ongoing. 

Overall, 2014 ended on a more positive note. The improvement in net trade is particularly welcome, and shows that the gradual depreciation in the euro is beginning to help boost external demand for eurozone exports. Also, more recent data showing rising consumer confidence and retail sales suggests that households are taking advantage of falling energy prices. We should see GDP accelerate further in the first half of this year, especially as monetary policy easing starts to filter through to the real economy. However, there are risks worth considering. Growth could disappoint if households and companies react negatively to the latest Greek crisis, and the continued tensions between Russia and Europe.


  • Europe ex UK
  • Azad Zangana
  • Growth
  • GDP

Important Information: The views and opinions contained herein are those of Schroders’ Investment team, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change.  UK: Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA, is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped or monitored. Further information about Schroders can be found at www.schroders.com US: Schroder Investment Management North America Inc. is an indirect wholly owned subsidiary of Schroders plc, a SEC registered investment adviser and is registered in Canada in the capacity of Portfolio Manager with the Securities Commission in Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan providing asset management products and services to clients in Canada. 875 Third Avenue, New York, NY, 10022, (212) 641-3800. www.schroders.com/us