Fourth Quarter GDP Barely Grows in the Eurozone

Fourth quarter eurozone GDP (gross domestic product) grew at a very slow pace of 0.3%.  Growth of this magnitude is barely above 0.0% and indicates just how precarious the economic recovery is in Europe.

Analysis: Officially the low rate of growth is being attributed to bad weather throughout Europe.  Yet the growth rate in the fourth quarter was the same pace as in the third quarter, which was not plagued by bad weather.  While it’s true that bad weather slowed construction in Germany by 25% – a huge percentage – the German economy still trails the United States in economic growth.  Yet, Germany is consistently the best performing economic in the eurozone.  So bad weather is a poor excuse for a continued lack of innovation, or what I like to call real economic growth.

Importance grade: 8; the eurozone technically has exited recession, but its gross economic performance continues to hover just above recession.  This is standard operating performance in Europe.  However, what is not standard is a eurozone economy that hovers just above recession and just above a consuming debt crisis.  While it is my feeling that the European debt crisis will pass without much affect, there remains a risk that Europe sinks into recession again.

Jason Apollo Voss, CFA