By: Dr. Mike Campbell
Growth within the Eurozone in the final quarter of 2010 came in at 0.3% which was slightly under the figure that many analysts had predicted. The zone posted a full year growth figure of 1.7% which matched the level seen in the wider European Union. In a year-on-year comparison, the 2010 GDP for Q4 was up by 2% on the 2009 figure, suggesting that the recovery is indeed real and sustained; albeit fairly muted in comparison with the recovery phase of other economic cycles.
According to national statistical agencies, the German economy grew by 0.4% in Q4 whilst France managed growth of 0.3%. The two figures contribute to full year GDP figures of 3.6 and 1.5% respectively. Whilst the French figure may look weak in comparison to the German performance, it comes hard on the heels of a contraction of 2.5% for 2009 – the worst French economic performance since the end of World War 2.
Poor (Weather) Forecast
In both countries, analysts had been predicting better growth figures, but it is believed that the unusually harsh weather conditions seen during the final quarter of 2010 caused a reduction of economic output. Consequently, it is anticipated that Q1 2011 will pick up where the old year left off (weather permitting) since the slackened pace was not due to economic factors.
Of course, France and Germany are two of the largest Eurozone economies, but not all members of the block posted Q4 growth. The Greek economy is trying to implement austerity measures and it saw its economy contract by 1.4%. Portugal has been in the spotlight as the next candidate for an EU bailout; its economy contracted by 0.3% in Q4. Spain, another country plagued with sovereign debt doubts, managed to come out of recession and post 0.2% growth, but saw a contraction of 0.1% for the full year.