Schroders Quickview: Germany and Spain lift eurozone growth

Azad Zangana

Azad Zangana

Senior European Economist and Strategist

See all articles

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.


The views and opinions contained herein are those of the Authors, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds.


This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.


Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested.


Schroders has expressed its own views in this document and these may change (to be used if the 1st statement above is not being used).


Schroders will be a data controller in respect of your personal data. For information on how Schroders might process your personal data, please view our Privacy Policy available at or on request should you not have access to this webpage.


Issued by Schroder Investment Management (Europe) S.A., 5, rue Höhenhof, L-1736 Senningerberg, Luxembourg. Registered No. B 37.799. For your security, communications may be taped or monitored


The forecasts stated in the document are the result of statistical modelling, based on a number of assumptions. Forecasts are subject to a high level of uncertainty regarding future economic and market factors that may affect actual future performance. The forecasts are provided to you for information purposes as at today’s date. Our assumptions may change materially with changes in underlying assumptions that may occur, among other things, as economic and market conditions change. We assume no obligation to provide you with updates or changes to this data as assumptions, economic and market conditions, models or other matters change.