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The eurozone economy was not as strong as expected last year.
The single currency bloc’s economy grew by just 0.4 per cent in the last quarter of the year and 1.7 per cent over 2016, official figures confirmed.
The figures from Eurostat were revised downwards from a flash estimate at the end of January of 0.5 per cent on a quarterly basis and 1.8 per cent on an annual basis.
Economists had been hoping that decent growth figures would show the single currency bloc was strong enough to withstand external shocks, including the UK’s decision to leave the European Union and the protectionist rhetoric of the new US president Donald Trump.
Commenting on the growth numbers, ING economist Bert Colijn said:
Even though GDP growth was revised down slightly, a 0.4 per cent quarter-on-quarter growth rate is still healthy in times of elevated political risk.
Strengthening domestic demand seems to be the overarching story for the eurozone recovery in recent months as employment growth has accelerated, confidence is well above long-term averages and the housing market is recovering in all eurozone economies. These factors are currently outweighing geopolitical uncertainties, but that does not mean that caution among consumers and businesses becomes stronger in the months ahead as elections come closer.
Separate figures showed that industrial production in the eurozone fell by slightly more than expected in December on a monthly basis, contracting 1.6 per cent down from a 1.5 per cent expansion in November.
But eurozone industrial production was stronger than expected on an annual basis, rising 2 per cent in December from expectations of a 1.7 per cent expansion on the same period in 2015, though it was still a slower growth rate than November’s 3.2 per cent expansion.
Economists had expected a fall in eurozone industrial production in December after German industrial output hit an eight-year low amid poor weather and an extended holiday break for workers, contracting by 3 per cent on a monthly basis.
Earlier figures on Tuesday showed the German economy expanded by less than expected in the fourth quarter of the year, expanding 0.4 per cent against expectations of 0.5 per cent but still showing annual growth hit its best pace since 2011 last year, at 1.9 per cent.
Separate figures showed the Italian economy accelerated at its best pace in six years at 0.9 per cent in 2016.