Euro zone GDP grows as expected in fourth quarter

GDP in the 19 countries sharing the euro rose 0.3 % quarter-on-quarter, new figures show

The euro zone economy grew at the same pace in the last quarter of 2015 as in the third because industrial output fell in December, data showed, marking a slowdown from the first half of the year and adding to arguments for further monetary easing.

The European Union’s statistics office Eurostat said gross domestic product in the 19 countries sharing the euro rose 0.3 per cent quarter-on-quarter in the last three months of last year, the same as in the July-September period and as expected by economists polled by Reuters.

Year-on-year, the euro zone economy expanded 1.5 per cent, also as forecast by economists.

No detailed breakdown was available with Eurostat’s first estimate, but separate data showed euro zone industrial output fell 1 per cent month-on-month in December for a 1.3 per cent year-on-year fall.

Economists polled by Reuters had expected a 0.3 per cent monthly rise and a 0.8 per cent annual increase in production.

Economists said such GDP growth rates would not be enough to generate enough inflationary pressure to take price growth up to the European Central Bank’s target of below, but close to 2 per cent annually from 0.4 per cent in January.

“We continue to think that further monetary easing is required, with further policy rate cuts on the cards from March onwards,” said Nick Kounis, economist at ABN Amro in a note published before the data release.

“However, more fiscal stimulus – in the form of public investment – in countries that have room for maneuver, and structural reform more widely – is also needed to support monetary policy,” he said.

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