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Euro area GDP shrinks by a bit less than expected in Q4 2020
By Alexander Bueso
Date: Tuesday 16 Feb 2021
LONDON (ShareCast) - (Sharecast News) - The euro area economy shrank by a tad less than feared at the end of 2020, revised data showed.
According to Eurostat, in seasonally adjusted terms the single currency bloc's gross domestic product dropped at a quarter-on-quarter pace of 0.6%.
That was better than the preliminary reading of -0.7% and followed a rebound of 12.4% over the three months to September and a 11.7% drop in the second quarter.
When compared to the last quarter of 2019, GDP was 5.0% lower.
From among the bloc's largest economies, growth in Germany (0.1%) and Spain (0.4%) accounted for the upwards surprise, while GDP in France (-1.3%), Italy (-2.0%) and the Netherlands (-0.1%) shrank.
Nonetheless, in year-on-year terms Spanish GDP fared worst by a wide marging, collapsing by 9.1%, although that was better than the 10-12% that some eocnomists had at one point anticipated.
German GDP on the other hand was down by a comparatively moderate 3.9%, that of France by 5.0%, alongside falls of 6.6% for Italy and of 3.0% in the Netherlands.
As of 1146 GMT, the yield on the benchmark Bund was two basis points higher to -0.37%.
In parallel, euro/dollar was strengthening 0.29% to 1.2164.
Claus Vistesen, chief euro area economist at Pantheon Macroeconomics, labelled Tuesday's revisions "trivial".
Looking ahead, his own forecast was for Eurozone GDP to contract at a 1-2.0% pace quarter-on-quarter over the three months to March before a "tepid" rebound ensued in the second quarter.
"By H2 the economy hopefully will be off to the post-vaccine races, but that baseline is uncertain too, at this point."