Home World Eurozone CRISIS: France and Italy’s shrinking economies spark PLUNGE in growth stats

Eurozone CRISIS: France and Italy’s shrinking economies spark PLUNGE in growth stats


In the fourth quarter of 2019, economies in the two EU member states shrank unexpectedly with Spain beating expectations and the bloc’s overall growth recorded at a disappointing 0.1 percent. Economists had been expecting a 0.2 percent growth despite global trade tensions teamed with slow manufacturing growth. But France and Italy alone have caused the bloc to plummet.

Chief German economist and ECB commenter Oliver Rakau tweeted: “It is quite a relief, that eurozone Q4 GDP wasn’t worse after the bad French & Italian numbers.

“But at 0.1 percent q/q growth remained weak at the end of 2019, while surveys only provide tentative evidence of a pick-up in early-2020.”

Katharina Utermöhl added: “Eurozone prelim. Q4 Flash estimate for Q4 2019 comes in at 0.1 percent as expected. National readings however surprised quite a bit.

“While there was so much concern about an economic setback in Germany, it was France (-0.1 percent) and Italy (-0.3 percent) that recorded negative readings.”

It comes as the IHS Markit eurozone purchasing managers’ index (PMI) last week published its findings.

The data remained unchanged at 50.9 in January, figures released yesterday reveal.

This is despite expectations for the key indicator of economic health to rise to 51.2 at the start of this year.

German activity rose above expectations but was offset by weaker data from France, which was hit by nationwide strikes for several weeks.

PMI data underlined the weak position of the eurozone economy, which remains only slightly above the crucial level of 50.

The majority of companies surveyed reported a shrinking of activity.

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A phase one trade agreement between Washington and Beijing was signed earlier this month.

It has boosted hopes of an easing of trade tensions that have been weighing on Europe’s export-dependent manufacturing sector.

However, the US continues to threaten to impose tariffs on european goods in retaliation for a tax on technology companies.

These threats are feeding anxiety that Europe could be the next frontline in the battle over trade.

The index for the eurozone’s services sector fell to 52.2, down from 52.8 in December. Economists had expected it to increase rather than decrease.


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