Eurozone GDP grew at the fastest pace in two years in the third quarter of 2024, driven by better-than-expected growth in Germany and France. European stocks fell on global market tensions and concerns about the upcoming US presidential election, while the euro rose on positive data.
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The eurozone economy expanded by an astonishing 0.4% quarter-on-quarter in the third quarter of 2024, with Germany and France outperforming expectations, Eurostat’s preliminary report said.
The pace of economic growth in the currency bloc accelerated from the 0.2% recorded in the second quarter, defying economists’ expectations of 0.2% growth and marking the euro zone’s strongest expansion since the third quarter of 2022. .
The European Union’s growth rate was 0.3%, consistent with the growth rate in the second quarter.
On an annualized basis, the seasonally adjusted GDP of the euro area and the European Union (EU) both increased by 0.9% in the third quarter of 2024.
Germany’s economy avoids contraction, France’s growth accelerates
According to provisional data from the Federal Statistical Office, the GDP of Germany, the region’s largest economy, rose 0.2% from the previous quarter, exceeding expectations for a 0.1% decline.
The recovery followed a downwardly revised 0.3% contraction in the second quarter, supported by higher government and household consumption.
However, despite this resilience, Germany is still expected to end 2024 with negative growth of 0.2%, the first consecutive year since the early 2000s, after a contraction of 0.3% in 2023. The next recession will occur.
France’s GDP grew by 0.4% in the previous quarter, up from 0.2% in the second quarter, supported by increased household consumption and government spending after the Paris Olympics.
According to INSEE, household consumption recovered by 0.5% due to increased purchases of goods, energy and information services. On the other hand, while trade made a slight positive contribution to GDP as both exports and imports decreased, fixed investment further declined, mainly due to a decline in spending on industrial products and services.
Among other euro area member states, Ireland led the way with solid quarterly growth of 2.0%, followed by Lithuania and Spain with 1.1% and 0.8% respectively. However, Hungary, Latvia, and Sweden experienced economic contraction.
Italy’s economy has stalled, expanding only by a modest 0.2% in the second quarter, with no growth seen, falling short of expectations for 0.2% growth.
market reaction
On Wednesday, the euro rose 0.3% to 1.0840 against the US dollar, supported by positive GDP data.
European government bond yields were little changed, with German federal bond yields flat at 2.3%.
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However, European stocks faced losses due to negative sentiment from Asia as traders braced for potential volatility ahead of next week’s US elections and the Federal Reserve’s interest rate decision.
Italy’s FTSE Mib was the hardest hit of the major indexes, falling 1.3% with Campari falling 15% and Stellantis falling 3%.
France’s CAC40 index fell 0.9%, while luxury stocks Kering and LVMH fell 3.8% and 2.5%, respectively. The Euro Stoxx50 index also fell 0.9%, affected by declines in French luxury brands, Dutch tech giant ASML Holding and European banks.
Investors are now focused on Germany’s October inflation report, due later in the day, and eurozone-wide inflation figures due tomorrow, both of which will reflect expectations on the European Central Bank’s next interest rate decision. may affect.
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