Robust growth for euro area economy at end of 2017

But strength in economy may sway ECB towards winding down stimulus

Photograph: iStock

Photograph: iStock

 

The euro-area economy maintained its robust growth pace at the end of last year, setting the stage for another solid performance in 2018 that may sway European Central Bank policy makers into winding down unprecedented stimulus.

Gross domestic product increased 0.6 per cent from the previous three months, Eurostat reported Wednesday, confirming a January 30th estimate. Growth slowed in Germany and Italy, while the pace of expansion accelerated in the Netherlands and Portugal, according to separate reports.

The European Commission has said the economic expansion in the 19-nation region is now more balanced than at any time since the financial crisis, and the International Monetary Fund has raised its global outlook for 2018. ECB policy makers say they’re increasingly confident that robust economic growth will slowly rekindle price pressures, paving the way for a gradual withdrawal of monetary accommodation.

Germany’s upswing - despite a slowdown in quarterly output - continues to be a key ingredient for growth in the euro area. Momentum in the country at the end of last year was driven by a strong increase in exports, according to a national report. Government consumption and equipment investment increased, while private spending remained largely unchanged and construction slipped.

The Dutch economy also benefited from buoyant global trade. GDP increased 0.8 per cent in the fourth quarter, exceeding economist estimates. Italian growth slowed to 0.3 per cent, leaving it lagging behind France and Germany and providing a note of caution ahead of general elections next month. GDP increased 0.7 per cent in Portugal. - Bloomberg