Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

France, Italy Drag Euro-Area Economy to Worst Quarter Since 2013

ForexJan 31, 2020 20:00
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

(Bloomberg) -- The euro-area economy barely grew at the end of 2019 as unexpected contractions in France and Italy dealt the bloc its weakest quarter in almost seven years.

The surprise slump in two of the region’s biggest nations is yet another blow for their governments. President Emmanuel Macron is already under fire amid protests over controversial pension reforms, while Italy’s fragile coalition is scarred by internal skirmishes.

Output in the 19-nation region rose just 0.1% in the fourth quarter, down from 0.3% in the previous period, and underlying inflation slowed in January to the weakest in three months. The French economy shrank 0.1%, and Italy posted a 0.3% contraction. Germany has previously said it posted slight growth at the end of 2019 -- the official reading is due next month.

The economic gloom may prove to be temporary. Surveys have suggested that the rot has been stemmed for now. The European Central Bank says the risks to the outlook have become “less pronounced,” and more signs of improving momentum came Thursday when the European Commission reported a marked rise in sentiment in January, led by manufacturing and construction.

What Bloomberg’s Economists Say

“Growth momentum is set to build into 2020 reflecting fewer risks from the global economy -- trade tension between the U.S. and China have eased somewhat and the worst type of Brexit should be avoided. We see quarterly growth of 0.3% through 2020.”

-- Jamie Rush.

Still, the reports could revive calls for more spending by countries that have fiscal space, such as Germany. The ECB has repeatedly called for action, and the European Union’s executive arm is planning to publish a document next week asserting that the euro zone’s fiscal rules are too convoluted.

The yield on German 10-Year debt has slipped in recent days and fell below -0.4% for the first time in three months. The euro was little changed at $1.1031 at 11:57 a.m. Frankfurt time on Friday.

Trade risks have returned to the fore with the U.S. renewing threats last week to raise duties on imports of cars from the EU, and France only narrowly avoiding American tariffs on wine and cheese in a dispute over digital taxation. The U.S. just reported the biggest drop in imports since 2009, and new concerns are emerging such as the coronavirus and the hit to Chinese and global growth.

French cognac maker Remy Cointreau has already sounded a note of caution over the impact of the virus on its business in China and ditched its guidance for the year. Airlines including Germany’s Lufthansa cut flights, and Finnish elevator-maker Kone expect a hit on bottom lines amid factory closures.

French Finance Minister Bruno Le Maire blamed his economy’s poor results on disruptions in ports, the rail network and fuel deposits and highlighted resilient consumption and business investment.

“This temporary slowdown does not call into question the fundamentals of French growth,” he said. Without the curb from companies using up stocks rather than increasing production, the economy would have expanded about 0.3%.

One bright spot was Spain, where the government woke up to more evidence that the economy is one of Europe’s outperformers. Faster-than-anticipated growth of 0.5% was driven by buoyant exports and a strong increase in services.

France, Italy Drag Euro-Area Economy to Worst Quarter Since 2013
 

Related Articles

Dollar Edges Lower Ahead of Fed Meeting; Yuan Weakens
Dollar Edges Lower Ahead of Fed Meeting; Yuan Weakens By Investing.com - Sep 21, 2021

By Peter Nurse Investing.com - The dollar edged lower in early European trade Tuesday, slipping from a month high, ahead of the start of this week’s crucial Federal Reserve...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email