Eurozone GDP Grew 0.3% in the Fourth Quarter, Stocks Rally

European markets closed higher today after the release of Eurozone economic growth data, a contrast to the decline in major Asian markets. Germany’s DAX Index grew 2.45%, with the UK’s FTSE 100 Index jumping 3.08% and France’s CAC 40 Index up for 2.52%.

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Source: CNN Money

Eurozone’s GDP grew 0.3% for the fourth quarter of 2015, the same with the previous quarter and in line with the consensus estimate. For the full year, Eurozone’s economy expanded by 1.5%.  

As the largest economy in the Eurozone, Germany had a GDP growth of 0.3%, remained the growth level of the previous quarter, in spite of the continued weakening of foreign trade. For the year 2015, Germany’s GDP growth was 1.7%, comparing to 1.6% for the previous year.

As the main driver of growth, the export accounts for 46% of Germany’s GDP, and has been affected by the sluggish economy of major markets such as China and Russia. Disappointing exports were offset by domestic demand and construction, with higher government expenditure and household consumption up slightly.  

Spain’s economy also satisfies the expectation with an economic growth of 0.8% primarily driven by consumer spending, thanks to lower unemployment rate benefited by the labor reform. Previously, the European Commission has also improved the outlook for Spain in 2016.

Weaker figures come from Italy and Greece. Italy’s GDP growth for the Q3 was only 0.1%, failing to meet the expectation of 0.3% and slower than the Q3, due to the lackluster domestic demand. Although better than expected, the depressed Greece’s economy shrank an additional 0.6% in the final quarter of 2015, as compared to the contraction of 1.4% in the previous quarter.

Although economic growth was able to remain steady, Eurozone is still threatened by the low inflation and financial markets turmoil. In January, European Central Bank’s Mario Draghi has signaled that a stimulus program could be carried out as early as March.   

  

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