Snapshot - Strategy & economics

Eurozone economy defies pessimists

Latest GDP data shows that France has helped the eurozone economy outperform the more pessimistic consensus forecasts. Whether Germany is in recession remains to be seen.

31/10/2019

Azad Zangana

Azad Zangana

Senior European Economist and Strategist

Schroders

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The eurozone economy appears to be healthier than feared. The latest preliminary data for GDP shows the economy grew by 0.2% quarter-on-quarter in the third quarter. This matches the previous quarter’s growth rate and beats consensus expectations of a slowdown. As this is a flash estimate, only a few member states have reported their early estimates.

France, being the largest member state to report would have contributed to the upside surprise as it grew by 0.3%, beating consensus estimates of 0.2%.

Italy and Belgium also surprised to the upside, growing by 0.1% and 0.4% respectively, while Spain matched consensus estimates of 0.4% growth.

Early reports suggest a continuation of recent trends. Solid domestic demand and service sector performance partially offset by weaker external demand and a slump in manufacturing.

One of the economies that is most reliant on manufacturing is Germany, which has yet to report its third quarter growth estimates. However, the readings from the other member states so far suggest that Germany’s GDP growth was between -0.1% and +0.1%. Therefore there is a reasonable chance the eurozone’s largest economy slipped into a technical recession, having contracted in the second quarter.

This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.

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