Snapshot - Economic Views

Eurozone economy defies pessimists

Latest GDP data shows that France has helped the eurozone economy outperform the more pessimistic consensus forecasts. Whether Germany is in recession remains to be seen.

10/31/2019

Azad Zangana

Azad Zangana

Senior European Economist and Strategist

The eurozone economy appears to be healthier than feared. The latest preliminary data for GDP shows the economy grew by 0.2% quarter-on-quarter in the third quarter. This matches the previous quarter’s growth rate and beats consensus expectations of a slowdown. As this is a flash estimate, only a few member states have reported their early estimates.

France, being the largest member state to report would have contributed to the upside surprise as it grew by 0.3%, beating consensus estimates of 0.2%.

Italy and Belgium also surprised to the upside, growing by 0.1% and 0.4% respectively, while Spain matched consensus estimates of 0.4% growth.

Early reports suggest a continuation of recent trends. Solid domestic demand and service sector performance partially offset by weaker external demand and a slump in manufacturing.

One of the economies that is most reliant on manufacturing is Germany, which has yet to report its third quarter growth estimates. However, the readings from the other member states so far suggest that Germany’s GDP growth was between -0.1% and +0.1%. Therefore there is a reasonable chance the eurozone’s largest economy slipped into a technical recession, having contracted in the second quarter.

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