The economic momentum in the euro zone slowed down in the final quarter of 2019. According to the first flash estimate, gross domestic product grew by only 0.1 percent compared with the third quarter. Between August and October, the growth rate was still 0.3 percent, bringing economic growth in the euro zone for 2019 as a whole to 1.2 percent, following 1.9 percent in 2018.
The slowdown is somewhat unexpected, as leading indicators such as the purchasing managers‘ indices and economic confidence stabilised over the quarter. At country level, according to initial calculations, it was above all the economic heavyweights France and Italy which, with negative growth rates of 0.1 and 0.3 percent respectively, depressed the overall result for the euro zone in the final quarter. In contrast, positive growth rates were recorded in Spain, Belgium and Austria.
No quarterly results have yet been published for the German gross domestic product. However, the data available to date indicates that German economic growth in the fourth quarter of 2019 was also positive and supported the eurozone result.
Overall, the data show that the euro zone economy is still under pressure. We remain skeptical about the further growth outlook. Higher economic growth than in the previous year is not expected in 2020. Although there have recently been some glimmers of hope in the sentiment indicators, numerous risks remain. These include, not least, the threat of possible US tariffs on European cars. It is also unclear to what extent the global economy will be damaged by the coronavirus.