Eurozone economy hits two-year high as households spend more!
The third estimate of the Eurozone's quarterly gross domestic product (GDP) growth rate for the third quarter was released on Friday. GDP growth reached 0.4% in the third quarter of 2024, according to Eurostat, in line with analysts' estimates, and above an increase of 0.2% in the second quarter of the year.
It was also the strongest growth seen in two years. The increase was mainly due to the increase in household spending, while inventories and higher government spending also contributed to it.
However, net trade covered the slight increase in GDP in the Eurozone, with imports rising 0.2% but exports falling 1.5%.
On an annual basis, the Eurozone GDP growth rate came in at 0.9% in the third quarter, also in line with market estimates, and above the second quarter's 0.5%.
Kyle Chapman, FX markets analyst at Ballinger Group, said: “Stronger-than-expected growth in the third quarter appears to be one of the main reasons why policymakers are leaning towards a 25bps rate cut rather than 50bps.
"There is a tension between looking back and looking forward here that the ECB will have to weigh next week. Growth was ultimately not as bad as expected over the past few months, but soft PMIs and political uncertainty in France and Germany suggest that things could get worse over the next few quarters.
"It's also worth noting that the growth surprise was distorted by volatility in data from Ireland, where quarter-on-quarter expansion was a hefty 3.5%."
Coming to Europe's largest economies, German GDP rose 0.1%, missing analysts' expectations of 0.2%. However, the country has still managed to avoid a recession.
This is despite Germany continuing to face a number of issues such as declining competitiveness, slowing economic growth, a decline in consumer sentiment and more economic and political uncertainty. Higher energy prices and stronger competition from Chinese manufacturers have also contributed to this.
The Dutch economy shrank to 0.8% in the third quarter of 2024, from 1.1% in the previous quarter, mainly due to lower export growth, a tightening labor market and falling labor productivity.
Similarly, the decline in net exports also affected the Italian economy in the third quarter of the year, along with the decline in manufacturing industry and the weakening of business and consumer confidence.
Spain's economy continued to expand, growing 0.8% and at the same pace as last quarter, with a strong labor market and consumption contributing to this figure, along with continued high tourism figures. The French economy also grew by 0.4%.
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