Germany tipped into recession but growth in Italy and Spain helped wider Eurozone avoid contraction.
Following the negative 0.1% Q3 GDP reading across the Eurozone, there had been much wailing and gnashing of teeth that Q4 would register a similar fall and result in the classic definition of a technical, albeit shallow, recession across the Euro area. However, the bloc managed to escape this by the skin of its teeth, with Q4 GDP at 0% showing not recession but stagnation. The overall GDP print was helped by growth ahead of expectations in Italy and Spain while Germany has fallen into recession. This growth, or lack thereof, will probably not embolden the rate cut doves at the European Central Bank – that would be more likely if we saw a more severe downturn while stagnation may mean rates could stay higher for longer.
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