European stocks declined Friday amid falling natural resource prices and a new set of economic data.
Saturday, November 15, 2014
The European Union’s statistics office showed gross domestic product growth of 0.2% in the third quarter. Germany’s gross domestic product expanded 0.1% in the third quarter and France’s strengthened 0.3%, allowing both nations to avoid recession. Italy’s GDP contracted 0.1%.
The numbers offered the “welcome news that fears of a renewed recession look exaggerated. However, the data will diminish hopes that the European Central Bank will feel the need to take further action to stimulate growth,” Chris Williamson, chief economist at Markit, told MarketWatch.
The Stoxx Europe 600 dropped 0.5% on the day and is headed for a 0.3% loss on the week. The German DAX 30 index declined 0.4%, the French CAC 40 lost 0.5% and the UK’s FTSE 100 fell 0.2%.
Europeans nations flirt with recession
The quarterly data from the European Union emphasized economists’ worries over falling investment and rising unemployment in the Eurozone, according to The Wall Street Journal. Other large economies, particularly the US and UK, are trending in the opposite directions.
Not every country showed sluggish progress. Greece – a nation hit hard by the region’s debt crisis – actually led the Eurozone with 0.7% third quarter growth. Spain registered healthy 0.5% expansion. But those two countries alone are not sufficient to push the entire 18-nation economy forward.
Inflation remains well below target
Eurostat indicated the annual inflation rate for the Eurozone in October came in at 0.4%, easily short of the Central Bank’s 2% target. With the weak GDP figures and the low inflation, the Eurozone figures to be the weakest link in the global economy.
“Growth is still nowhere near strong enough to eat into the vast amount of spare capacity in the region and hence diminish the risks of a prolonged and damaging bout of deflation,” Jonathan Loynes, economist at consultancy Capital Economics, told The Wall Street Journal.
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