Euroland’s economic performance remains vibrant. In the final quarter of 2017 it posted again robust growth in gross domestic product (GDP), achieving a rise of +0.6 percent on the previous quarter. Compared to the summer quarter, when the figure was +0.7 percent, the ascent slipped slightly, but for the year as a whole the quarterly results tot up nicely, translating into very sound economic growth of +2.5 percent as against 2016.
No details on the various components were published along with the flash estimate. “Hard” data, such as that for industrial output or the trade account, would, however, point to the strong momentum being driven more by domestic consumer spending. One gratifying aspect: the sharp rise in the output of capital goods in November 2017. Stronger demand in particular for investments in equipment can be read as a positive signal for the potential increase in an economy’s productivity. In this context, the growth in Eurozone productivity remained visibly depressed in recent years.
The first results for individual countries underscore the robust growth momentum in Euroland. Former “problem child” France has even managed to crank the economic motor up a notch or two, with economic growth in the autumn months running at +0.6 percent (Q3 2017: +0.5 percent) and thus on a par with the aggregate for the EMU. Greater investment activity and very positive private-sector sentiment suggest that companies in France welcome President Macron’s reform zeal.
In Spain, by contrast, the economic dynamism has eased slightly, albeit at a high level. In the final quarter, growth on the summer quarter was +0.7 percent (Q3 2017: +0.8 percent). In recent months, with its aspirations for autonomy the Spanish region of Catalonia has scattered sand among the economic cogs. However, the impact was evidently less of a strain than expected. Moreover, in Belgium, the pace of economic growth more than doubled from +0.2 percent in Q3 to +0.5 percent in final-quarter 2017. Other quarterly results for the individual EMU member states are scheduled for release from 14 February onwards. We assume that overall economic momentum has remained robust in the other countries, too.
For the current and the coming year, we expect the Eurozone’s solid economic performance to continue. Growth rates look set overall to be slightly down on 2017, in the range of two percent per annum. In our opinion, the greatest risks to the economic trend in coming years will probably be of a geopolitical nature (e.g., the USA-North Korea conflict) and the consequences of Brexit.