Eurozone: weak start slowing mirrors UK until 2018

Eurozone economic growth slowed in the first three months of 2018, as the national data showed a sharp drop in export demand and consumer spending remains modest.

The Eurozone economy grew by 0.4 PC in the first three months of 2018, compared with 0.7 PC in the three months to December, according to official statistics released Wednesday.

The slowdown in the Eurozone is the same as in the UK, which also fell 0.3 percent in the first three months of 2018.

Growth in the Eurozone slowed from a higher base, however. Growth in the UK over the last three months of 2017 were 0.4 PC, some 0.3 percentage points lower than in the Eurozone and the economy has reached a standstill in three months in March, down 0.1 PC rate of expansion.

The UK economy is particularly susceptible to falling demand from consumption in the Eurozone. Some 43pc of UK exports went to the EU in 2016. Both countries also seem to have been affected by bad weather and the Easter time this year.

Claus Vistesen of Pantheon macroeconomics said the GDP growth estimate for the Eurozone came in better than some investors feared. In fact, it is in contradiction with other data that until now still, starting in 2018.

“Either GDP figures will be revised downwards, or the first hard quarter will be revised,” said Mr. Vistesen.

While temporary factors such as cold weather and the flu had an impact on GDP growth, this was not the only reason, said Stephen brown capital economy.

“But there is no denying that the main growth has slowed in the past year, the support from net trade weakened,” said brown.

Mario Draghi, the ECB President

Unemployment in the Eurozone remained at a relatively high level, and more than twice that UK and US rates are close to 4pcs. Data released on Wednesday showed the unemployment figure of 8.5 PC in March. It has not moved since February.

There was also a very mixed picture for unemployment in the member States of the Eurozone.

The unemployment rate in Greece was at 20.6 PC, more than six times that the very low level of Germany 3.4 PC. Spain still had a relatively high unemployment rate 16.1 PC, as of March, while the unemployment rate in Italy remained at 11pc.

Growth in the UK and the Eurozone slowed to 0.3 percentage points in the first three months of 2018, although in the Euro area slowed more than high level

Credit:
Dario Pignatelli/Bloomberg

Different levels of unemployment, often seen as a measure of slack in the economy may partially explain why inflationary pressures remain subdued in the currency bloc.

Weak inflation and a slowdown in economic growth, said Mr. Draghi last week.

The uncertain trade relations between the United States and will hit economic confidence, said Mr. Draghi.

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