Eurozone growth slows dramatically as third-quarter GDP misses forecasts
Growth in the eurozone has slumped to its weakest rate for four years, official data showed on Tuesday, as German car manufacturing stalled and the Italian economy lost momentum.
Seasonally adjusted third-quarter GDP rose 0.2% across the 19 countries that have the euro, and 0.3% in the wider European Union.
That compared to growth of 0.4% in the Eurozone and 0.5% in the EU in the second quarter, according to Eurostat, the EU’s statistical office. In 2017, third-quarter GDP rose 1.7% and 1.9% respectively.
The figures were below expectations.
Eurostat will not publish the components of the data until next month. But Nicola Nobile, lead Eurozone economist at Oxford Economics, said: “At this stage, the available monthly indicators and national data suggest that industrial production could have been again subdued.
“As we believe that part of the slowdown is being caused by transitory factors, particularly in Germany, we still expect a modest bounce back in fourth-quarter activity. But we are conscious that temporary factors have been overplayed to justify the slowdown in the Eurozone economy at the start of the year, and that risks are clearly skewed to the downside.”
Oxford Economics has therefore revised down its full-year forecasts, from 2% to 1.9%.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said that while the figures missed expectations, the markets were “likely prepared for it”.
He added: “The consensus for an unchanged run-rate looked a bit odd given the poor trajectory of the hard data, especially in Germany. We don’t know yet what happened in the Eurozone’s largest economy in the third quarter, but we are fairly certain that volatility in manufacturing, around the EU’s emissions tests in the car sector, was a big drag.
“Elsewhere the early data showed that French growth rebounded from a pedestrian second quarter, but the Italian economy stalled.”
Separate data published on Tuesday showed that the Italian economy – the third largest in the eurozone – failed to grow in the third quarter, the first time growth has stalled in the country since 2014.
However, Vistesen said he was “fairly confident” Eurozone growth would recover in the fourth quarter and has left his full-year prediction unchanged at 1.9%.