The eurozone’s economy grew steadily in the three months after Britain’s shock vote in June to leave the European Union, but it was a mixed picture with German economic expansion not as good as expected as exports fell.
Point of view
If Germany's single most important trading partner, the United States, really moves towards more protectionism, this would definitely leave its mark on German growthING Bank economist
Gross domestic product (GDP) in the entire currency bloc expanded by 0.3 percent in the third quarter, on a par with April-June, the EU’s statistics office said on Tuesday, confirming an earlier flash estimate.
However US President-elect Donald Trump’s protectionist threats are leading to worries about the outlook for next year, particularly for exporters like Germany.
Europe’s largest economy eked out weaker-than-expected growth of 0.2 percent in the third quarter as foreign trade slowed.
ING Bank economist Carsten Brzeski said Germany’s domestic economy should be strong enough to ensure solid though perhaps waning GDP growth in the coming quarters.
“However, if Germany’s single most important trading partner, the United States, really moves towards more protectionism, this would definitely leave its mark on German growth,” he said.
In addition, uncertainty about the length and outcome of Brexit negotiations between London and Brussels is also expected to limit the eurozone’s medium-term growth prospects.
Italy boosted by domestic demand
Elsewhere in the eurozone, Italy’s economy surprised between July and September. It rebounded a bit thanks to improved domestic demand which will be welcome news for Prime Minister Matteo Renzi.
Industry and services activity expanded, while agriculture contracted, but growth still remains sluggish in the eurozone’s third largest economy. It was up 0.3 percent from the previous three months and 0.9 percent year-on-year.
Some of the region’s best numbers came from Portugal where growth accelerated sharply in the third quarter thanks to higher exports.
The economy expanding by 0.8 percent from the preceding three-month period and 1.6 percent compared to the same period of 2015.
Exports were the main driver of growth but the statistics office said domestic demand also rose compared with a year ago.