 "Germany, France help euro area expand")
The euro-area economy grew faster than analysts forecast in the September quarter as Germany and France rebounded and Greece showed some signs of revival.
Gross domestic product increased 0.2 per cent from the previous period, when it rose 0.1 per cent, Eurostat, the European Union's statistics office in Luxembourg, said on Friday. That's more than the median of 39 estimates in a Bloomberg News survey for 0.1 per cent.
The euro area's recovery has been in peril since economic malaise transferred from once crisis-stricken nations such as Spain and Ireland to countries in the region's core. With inflation close to the lowest level in five years, the European Central Bank (ECB) is preparing to add to unprecedented stimulus and urged governments to invest in and deliver structural reforms to support growth.
Country breakdown
Germany and France, the euro area's two largest economies returned to growth in the September quarter, with expansions of 0.1 per cent and 0.3 per cent, respectively. Italy remained a weak spot, shrinking for a second quarter. Cyprus was the only other member of the currency bloc to register a quarterly contraction.
Greece, where a six-year recession wiped 25 per cent off GDP and protests against austerity measures jeopardised the country's membership of the currency bloc, recorded quarterly growth of 0.7 per cent in the three months through September, the third consecutive increase in output. The data may help Prime Minister Antonis Samaras as he pushes Greece to follow Ireland, Portugal and Spain out of its rescue programme. The Frankfurt-based ECB has already unleashed a barrage of unconventional measures, including a negative deposit rate, long-term loans and asset purchases, to boost growth and inflation. President Mario Draghi said last week that policy makers had commissioned proposals for fresh stimulus, stoking speculation the central bank was moving closer to sovereign quantitative easing.
Stimulus debate
"The discussion about further monetary policy measures is justified, and we expect Draghi will gain the upper hand," said Karsten Junius, chief economist at Bank J Safra Sarasin AG in Zurich, referring to the debate on the Governing Council on more stimulus.
The ECB, which forecasts growth of 0.9 per cent this year and 1.6 per cent in 2015, last week endorsed weaker projections such as those by the European Commission that foresee expansions of 0.8 per cent and 1.1 per cent, respectively. The central bank will publish its own updated outlook next month.
"Monetary policy has done and will continue to do its part," Draghi said in Rome on November 12. But even if combined with a fiscal policy, it is "not enough to generate a revival of strong and sustainable growth without the necessary structural reforms," he said.
While some support to growth may have come from the euro, down almost 11 per cent since early May, and oil prices, which have fallen more than 25 per cent in the same period, sanctions against Russia over its involvement in Ukraine have damped exports. EON SE, Germany's biggest utility, reported a wider third-quarter loss than last year, as a weaker ruble crimped earnings from Russia and power prices declined.
Suit-maker Hugo Boss AG trimmed targets for the year, citing a "substantial slowdown" in Europe, with demand declining in October and November, while Unilever reported the slowest quarterly sales growth since 2009.
"We remain optimistic the euro zone can shake off the latest economic rough patch," said Christian Schulz, senior economist at Berenberg Bank in London. "Once external risks like Russia have faded from businesses' minds and the downward spiral in business confidence has ended, Germany can rebound quickly and resume its leadership role in the euro zone."
IN DIRE STRAITS 0.3% France's GDP expanded from previous period
Gross domestic product increased 0.2 per cent from the previous period, when it rose 0.1 per cent, Eurostat, the European Union's statistics office in Luxembourg, said on Friday. That's more than the median of 39 estimates in a Bloomberg News survey for 0.1 per cent.
The euro area's recovery has been in peril since economic malaise transferred from once crisis-stricken nations such as Spain and Ireland to countries in the region's core. With inflation close to the lowest level in five years, the European Central Bank (ECB) is preparing to add to unprecedented stimulus and urged governments to invest in and deliver structural reforms to support growth.
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"We see a picture confirming an outlook of weak growth but with limited risks of a relapse into recession," said Marco Valli, chief euro-area economist at UniCredit Global Research in Milan. "Some sentiment indicators show signs of stabilising." The euro slipped 0.3 per cent to $1.2444 at 12:50 pm Frankfurt time. The Stoxx Europe 600 Index was down 0.6 per cent.
Country breakdown
Germany and France, the euro area's two largest economies returned to growth in the September quarter, with expansions of 0.1 per cent and 0.3 per cent, respectively. Italy remained a weak spot, shrinking for a second quarter. Cyprus was the only other member of the currency bloc to register a quarterly contraction.
Greece, where a six-year recession wiped 25 per cent off GDP and protests against austerity measures jeopardised the country's membership of the currency bloc, recorded quarterly growth of 0.7 per cent in the three months through September, the third consecutive increase in output. The data may help Prime Minister Antonis Samaras as he pushes Greece to follow Ireland, Portugal and Spain out of its rescue programme. The Frankfurt-based ECB has already unleashed a barrage of unconventional measures, including a negative deposit rate, long-term loans and asset purchases, to boost growth and inflation. President Mario Draghi said last week that policy makers had commissioned proposals for fresh stimulus, stoking speculation the central bank was moving closer to sovereign quantitative easing.
Stimulus debate
"The discussion about further monetary policy measures is justified, and we expect Draghi will gain the upper hand," said Karsten Junius, chief economist at Bank J Safra Sarasin AG in Zurich, referring to the debate on the Governing Council on more stimulus.
The ECB, which forecasts growth of 0.9 per cent this year and 1.6 per cent in 2015, last week endorsed weaker projections such as those by the European Commission that foresee expansions of 0.8 per cent and 1.1 per cent, respectively. The central bank will publish its own updated outlook next month.
"Monetary policy has done and will continue to do its part," Draghi said in Rome on November 12. But even if combined with a fiscal policy, it is "not enough to generate a revival of strong and sustainable growth without the necessary structural reforms," he said.
While some support to growth may have come from the euro, down almost 11 per cent since early May, and oil prices, which have fallen more than 25 per cent in the same period, sanctions against Russia over its involvement in Ukraine have damped exports. EON SE, Germany's biggest utility, reported a wider third-quarter loss than last year, as a weaker ruble crimped earnings from Russia and power prices declined.
Suit-maker Hugo Boss AG trimmed targets for the year, citing a "substantial slowdown" in Europe, with demand declining in October and November, while Unilever reported the slowest quarterly sales growth since 2009.
"We remain optimistic the euro zone can shake off the latest economic rough patch," said Christian Schulz, senior economist at Berenberg Bank in London. "Once external risks like Russia have faded from businesses' minds and the downward spiral in business confidence has ended, Germany can rebound quickly and resume its leadership role in the euro zone."
IN DIRE STRAITS
- 0.2% Gross domestic product increased in the September quarter from the previous period, when it rose 0.1%, Eurostat, the European Union's statistics office in Luxembourg, said on Friday
- 0.3% The euro slipped to $1.2444 at 12:50 pm Frankfurt time.
- 0.1% Germany's GDP expanded from previous period