Eurozone Growth Falls To A Four-Year Low

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The Eurozone economy gas stuttered and stalled to the lowest growth level in four years.

The latest data shows growth for the third quarter of 2018 slumped to 0.2%.

Economists blamed the problem on new emissions tests slowing scandal-hit German car production and turmoil in the Italian economy.

But some pointed out these excuses may be masking more serious concerns as the slump has trended for nine months – long before these reasons emerged.

In fact, Eurozone growthlevelled off after a year of increases in Q2 2017 and stood still for two more quarters before dropping off to the current level.

Temporary problems

“As we believe that part of the slowdown is being caused by transitory factors, particularly in Germany, we still expect a modest bounce back in Q4 activity,” said Nicola Nobile, lead eurozone economist at Oxford Economics.

“But we are conscious that ‘temporary factors’ have been overplayed to justify the slowdown in the eurozone economy at the start of the year, and that risks are clearly skewed to the downside.”

Sources outside Europe feel the Eurozone is suffering fall-out from the trade war between the USA and China.

Economic growth in China has stalled as well, resulting in a falling demand for EU goods, especially car spares.

Brexit uncertainty

Others cite a pullback in quantitative easing hitting the Eurozone economy.

Alastair Neame, a senior economist at consultancy CEBR, said: “The Eurozone economy looks set to weaken further as pressure mounts on two fronts. First, with global growth and trade volumes slowing, the positive contribution to growth from trade is looking less reliable, although French estimates of an improved trade balance provide some solace on that front.

“Second, the risk of economic disruption emerging closer to home is also growing. With Brexit negotiations still to be concluded, the UK’s imminent departure from the EU threatens supply chains that are deeply embedded across the Eurozone if a deal can’t be reached.”

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