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Euro Zone GDP weakens in third quarter amid fragmentation

Euro zone GDP in third quarter slowed down further from second by 0.1%, to 0.3%, while annual pace of growth came at 1.6%, compared to 1.5% in previous quarter.

While there hasn't been much of a surprise in weakness, since it has been a weak quarter globally for growth and trade, however what is more concerning is fragmentation. It is natural to have various pace of growth in such a broad union, however for some members, numbers are quite concerning.

  • For example, growth in Portugal stagnated in third quarter, with no growth. That is quite bad considering the recent political uncertainty in the country, with the rise of anti-austerity parties in latest general election.
  • While GDP growth is encouraging in some countries such as Slovenia (+0.9%), Spain (+0.8%), Cyprus (+0.5%), countries like Greece still reeling in negative growth.
  • Another key concern is Finland, as per today's estimate Finland's GDP is on its way to shrink for three of the past four quarters. Third quarter GDP was worst among Euro zone countries at -0.6%.

With such economic numbers, European Central bank is more likely to ease than not.

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