The eurozone’s economy recovery lost steam in the third quarter as weaker global demand — with Chinese consumers tightening their belts — hit growth, including in the region’s export-oriented powerhouse, Germany.
A day after European Central Bank chief Mario Draghi voiced concerns about the European economy to the Parliament in Brussels, Eurostat said output in the 19-member euro area slowed to 0.3 percent, from 0.4 percent in the second quarter of the year.
Releasing its flash estimates for the quarter, the EU statistics agency said growth in the whole of the 28-member EU was modest but stable at 0.4 percent.
“Softer external demand appears to have muted any beneficial impact on exports from the lower euro,” said Capital Economics in a research note, predicting that the ECB would respond by buying more sovereign bonds to try to boost the eurozone economy.
There was better news for France, the eurozone’s second-largest economy, which returned to growth in the third quarter after stagnating in the second quarter. French President François Hollande has made a return to growth and a reduction in the 10 percent unemployment rate a condition for a reelection bid in 2017.
“This morning’s figure confirms that in 2015 we have exited the period of weak growth,” Finance Minister Michel Sapin said after news that gross domestic product expanded by 0.3 percent in the quarter, thanks to an increase in household spending and a rebound in manufacturing. France managed zero growth in the second quarter, when industrial output contracted 0.1 percent.
German economic growth slowed to 0.3 percent from 0.4 percent in the second quarter, with the Federal Statistics Office citing slower foreign trade as the main drag on growth.
In Portugal, where an anti-austerity leftist coalition has toppled the center-right government that steered Portugal through the eurozone debt crisis, the economy registered zero growth in the third quarter, with domestic demand and investment falling.
Portugal’s early exit from an international bailout program made it the poster-boy for German-prescribed austerity, but the latest data may boost the incoming leftist government’s arguments for more of a focus on growth-oriented policies.
Greece’s economy contracted by 0.5 percent in the third quarter but that was better than the forecast shrinkage of about 1 percent, and there was bad news for Finland, whose Finance Minister Alex Stubb has called it the new “sick man of Europe.” The Finnish economy receded by 0.6 percent, which was blamed on sanctions against nearby Russia, among other factors.