In the last quarter of 2019, the economies of France and Italy unexpectedly shrank, which slowed down the growth rate of the entire eurozone – which now is close to stalling, shows latest data.
According to the European Union statistics agency Eurostat, during the fourth quarter of the last year, there was just 0.1 per cent growth in the gross domestic product (GDP) in the currency bloc compared to the previous three months of the year.
These figures were made public on the very day that the United Kingdom formally left the EU which is likely to further dent the economy of the continent as well as that of the UK. The figures showed that the eurozone economy expanded by only 1 per cent on an annual basis.
There was 0.1 per cent shrinkage in the growth in the economy of France – the second largest economy of the EU, because of continued nationwide strikes by workers protesting against the pension reforms of French president Emmanuel Macron which was a headwind for growth. French GDP growth missed forecasts of a poll of economists conducted by City by Reuters who had predicted a small increase in GDP.
The strikes in France across the country had disrupted ports, the railway network, petrol depots and other crucial infrastructure of the country. The strikes were organized primary by workers protesting against the French government’s plans of transforming the country’s 42 different retirement benefit schemes into a universal points system and to raise the state pension age.
During the fourth quarter, the French economy reported a manufacturing output of 1.6 per cent because of the strikes that slowed down business activity. This was augmented by a wider downturn in factory output in a number of major economies across the world that was a result of the trade war between the United States and China.
On the other hand, there was a 0.3 per cent shrinking in the Italian GDP for the fourth quarter which is the worst performance of the economy since early 2013. The GDP was dragged down by weak demand for goods and services domestically. The growth of the Italian economy was also lower than the forecast by a panel of economists polled which reflected the broader issue across the wider EU economy.
Out of those countries in the eurozone that reported their GDP figures on Friday, the only one to report a growth in their GDP in the fourth quarter was Spain with the economy growing by a very small rate of 0.5 per cent because of a stronger export performance.
Germany, the largest economy of Europe, will publish its growth figures in February while the same will be done by the UK.
The eurozone had ended 2019 with a whimper, said Rosie Colthorpe, European economist at the consultancy Oxford Economics.
“With an encouraging recent rise in sentiment indicators, we still think that the eurozone economy should see growth pick up gradually in 2020,” she however added.
(Adapted from TheGuardian.com)