Tuesday 12 December 2017

Growth in exports slow across euro area for Q3

Investment stagnates in same period, latest statistics show

European export growth slowed and investment stagnated in the third quarter, countering a gain in consumer demand and curbing an economic expansion.

Exports from the 16-member euro region rose 1.9pc from the second quarter, when they increased 4.3pc, the European Union's statistics office in Luxembourg said yesterday.

Investment stalled after rising 1.7pc in the second quarter, while spending growth by consumers accelerated to 0.3pc from 0.2pc. Gross Domestic Product growth eased to 0.4pc from 1pc.

Europe's economic expansion is cooling as authorities struggle to halt a sovereign-debt crisis, which forced the Irish Government to seek external help last month. The European Central Bank is under pressure to aid governments' efforts to stem the turmoil.

There was some "moderate encouragement" that the recovery was becoming a "touch more broad-based," said Jonathan Loynes, chief European economist at Capital Economics in London.

"While the economy appears to be weathering the sovereign debt crisis reasonably well for now, there are still good reasons to be concerned about the outlook over the coming quarters."

The euro was little changed after the report, trading at $1.3184 at 12:05pm yesterday in Frankfurt, from $1.3139 on Wednesday.

Growth in government spending accelerated to 0.4pc in the third quarter from 0.1pc, yesterday's report showed.

Imports increased 1.7pc, slowing from a 4.2pc pace.

There was no contribution to GDP from inventories after they added 0.4pc in the previous three months.

From a year earlier, euro-area GDP rose 1.9pc, after increasing a revised 2pc in the second quarter.

The statistics office had previously reported an annual GDP gain of 1.9pc in the second quarter. A separate report showed producer-price inflation accelerated to 4.4pc in October from 4.3pc. In the month, prices rose 0.4pc.

The GDP data adds to signs of increasing divergence within the euro area. German GDP increased 0.7pc from Q2, when it surged a record 2.3pc, while growth in France slowed to 0.4pc from 0.7pc. Italy's expansion eased to 0.2pc from 0.5pc.

In Spain, the economy stalled in the third quarter and Greece's economy contracted 1.1 percent. The statistics office didn't publish data for Ireland.

Reports showed manufacturing strengthened in Germany and France in November, while it stagnated in Spain and shrank in Greece.

Ireland's €85bn aid package has failed to quell market turmoil as investors shift attention to other nations.

ECB president, Jean-Claude Trichet, said on November 30 that observers tend to "underestimate the determination of governments" to restore euro-region stability.

The ECB may be "forced to increase its programmes substantially" to help ease the debt crisis, said economist Juergen Michels.

"The existing measures are unlikely to be sufficient to solve the problems in the periphery," he said.

"The euro will be defended at all costs," said Jan Poser, chief economist at Bank Sarasin in Zurich. "Paradoxically, the weak euro will not lead to the failure of euroland, but will raise growth in core countries, which will help to pull the European periphery out of its debt hole."

Irish Independent

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