Euro zone economy flatlines in fourth quarter, missing expectations for slight expansion – CNBC

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Earlier on Thursday, official data showed that Germany’s gross domestic product fell 0.2% in the fourth quarter, while France’s economy also shrank slightly over the same period. Italy’s economy flatlined quarter-on-quarter, data showed earlier Thursday.In stark contrast, Spain’s gross domestic product grew by 0.8% in the fourth quarter, the country’s statistics office INE said Wednesday. Neighboring Portugal’s economic growth also accelerated in the same quarter, to 1.5% with its national statistics agency attributing the expansion to an “acceleration in private consumption.”The euro was down 0.15% against the dollar following the data, which could spur on the European Central Bank when it comes to determining its next interest rate step later on Thursday.The central bank has sought to boost economic activity and investment in the euro zone by implementing four interest cuts last year. The ECB is expected to make another 25-basis-point trim when it meets later on Thursday to bring the key rate, the deposit facility, down to 2.75%.Follow CNBC’s ECB live blog here: European Central Bank set to trim interest rates for fifth time since JuneEconomists expect the central bank to make further interest rate cuts this year as fears over faltering growth trump concerns over stubborn inflation in the bloc.”The stagnation in euro-zone GDP in Q4 supports our view that the region’s economic prospects are worse than most think. We expect this to prompt the ECB to cut interest rates by more this year than is discounted in the market,” Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics, said in emailed comments following the data release.In December, the central bank forecast that the euro zone economy would grow by 1.1% in 2025, saying that it expects euro area GDP growth to “weaken somewhat in the short term, amid significant uncertainty.””Survey-based indicators relevant for activity, such as the Purchasing Managers’ Index (PMI) and business and consumer confidence indicators from the European Commission, remain subdued,” the central bank stated in December.The ECB had expected the economy to grow by 0.2% in the fourth quarter of 2024 as the one-off factors supporting growth last summer, such as the Paris Olympics, faded, and amid continuing “subdued confidence, high uncertainty and geopolitical tensions.” The central bank anticipates GDP growth to be 0.3% in the first quarter of 2025.Central bank policymakers will be mindful of inflationary pressures in the region, with the euro zone consumer price index ticking upward in recent months, hitting 2.4% in December.Core inflation, which strips out volatile food and energy prices, was unchanged at 2.7% for the fourth consecutive month in a row. The central bank forecast the inflation rate in the bloc to come in at 2.1% this year.Got a confidential news tip? We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.© 2025 CNBC LLC. All Rights Reserved. A Division of NBCUniversal
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Source: https://www.cnbc.com/2025/01/30/euro-zone-gdp-q4-2024.html