You are here

Eurozone faces stagnation, as inflation falls again

doc77rtcau9991rqftoir8_doc75vkecd1c9w1ghap2kqp.jpg
Economic growth in the eurozone remained at a weak 0.2 per cent in the third quarter and inflation fell in October, underlining the risk of stagnation in the 19-nation single-currency bloc.

[BRUSSELS] Economic growth in the eurozone remained at a weak 0.2 per cent in the third quarter and inflation fell in October, underlining the risk of stagnation in the 19-nation single-currency bloc.

According to official Eurostat figures published Thursday, inflation fell from 0.8 per cent in September to 0.7 per cent in October, well below the European Central Bank's target rate of just under two per cent.

The fall was in line with the predictions of analysts surveyed by financial services firm Factset, but nevertheless was the lowest rate since Nov 2016.

The 0.2 per cent growth rate was better than a predicted 0.1 per cent, but has now remained at an anaemic 0.2 per cent for three quarters in a row, underlining the eurozone's plight amid global uncertainty.

sentifi.com

Market voices on:

Growth has been hurt by trade disputes and by the ongoing saga of Brexit, which have generated uncertainty for the eurozone's great export power Germany, whose manufacturing sector is entering recession.

"The months ahead are likely to remain tricky for the eurozone," Bert Colijn, senior eurozone economist for the bank ING, said in an analyst's note.

"Survey data indicates that Q4 is off to a rough start and while recent news about global economic risks like the trade war and Brexit have been promising, downside risks remain for the moment."

Andrew Kenningham of Capital economics agreed: "The slightly better-than-expected third-quarter GDP figure for the euro-zone does not alter the fact that the region is expanding at only a very modest pace.

"And forward-looking indicators suggest that it is likely to slow further in the fourth quarter," he said.

Eurozone unemployment remained steady in September at 7.5 per cent - the same as August's figure, which was the lowest in 11 years.

AFP