Euro zone growth slowed in Q4 as Omicron COVID wave hit

Euro zone growth slowed in Q4 as Omicron COVID wave hit
By Reuters
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BRUSSELS -The Omicron wave of COVID-19 infections slowed euro zone economic growth in the final quarter of 2021 compared to the previous three months although the impact was much stronger in Germany than in France or Italy.

The European Union’s statistics office estimated on Monday that gross domestic product in the 19 countries sharing the euro expanded a quarterly 0.3% in October-December 2021, slowing sharply from 2.3% growth in the previous three months. The flash reading was as expected in a Reuters poll of economists.

Year-on-year growth was still a respectable 4.6%, roughly in line with economists’ expectations.

“The (coronavirus) wave in autumn left clear traces in the euro economy,” said Christoph Weil, economist at Commerzbank.

“There were significant differences between the euro countries due to the pandemic. In spring the Omicron wave should have subsided and the economy should grow more strongly again.”

A surge in infections caused by the Omicron variant of the coronavirus caused COVID-19 measures to be reimposed in many European countries at the end of last year.

Germany, the euro zone’s biggest economy, was the weakest performer, contracting 0.7% quarter-on-quarter and growing just 1.4% year-on-year.

France, the bloc’s second biggest economy, saw quarterly growth of 0.7% and a 5.4% year-on-year expansion, while third-biggest Italy grew 0.6% on the quarter and 6.4% on the year.

“The recent lifting of COVID restrictions in many European countries should help to get economic and business growth back on track,” said Rachel Barton, economist at Accenture.

A survey by the German Ifo economic institute on Monday gave grounds for optimism, showing that the number of German manufacturing companies reporting bottlenecks and problems with intermediate products and raw materials was falling.

Eurostat estimated that euro zone GDP in the whole of 2021 compared to the whole of 2020, based on seasonally and calendar adjusted quarterly data, increased by 5.2%.

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