Euro zone annual growth backs ECB's tapering move

Marco Green
November 14, 2017

This was marginally above the 0.6 per cent predicted by markets and brings full year estimates to 2.3 per cent. The US quarterly numbers were slightly better than the euro zones at 0.7%, however.

"Because of that, this could well be its strongest year for growth since 2007". That pace of growth supported expansion across the broader euro zone.

Markets have turned more positive on Europe in recent weeks as traders return to European equities without a currency hedge - a sign of confidence in the strength of the Euro.

The strong euro zone growth was powered by the biggest economy Germany, which shifted into an even higher gear in the third quarter, propelled by buoyant exports and rising company investments in equipment.

As a effect, analysts at Julius Baer expect the USA economy to outperform the eurozone in 2018 with 2.5% GDP growth, after being on par this year.

In early London trades, the euro rose 0.3 percent to $1.1696, its highest since October 26, when the European Central Bank said it would extend its asset purchase program until at least September.

The economy of Italy is seeing accelerating growth: 0.5% q/q, the highest since 2009.

The euro-zone had already published an initial estimate of its growth rate for Q3, but this did not include the largest economy, Germany.

The Euro dipped down after the data release. was trading at 0.8942 compared to 0.8949 prior and at 1.175 from 1.1717 just before the report.

Despite efforts at the Bank of England to curb inflation by hiking interest rates on 2 November, chief economist Andy Haldane said in a blog post on Monday that the Bank expects inflation to remain above its 2 per cent target for "the next few years".

"The outlook for production in the fourth quarter remains strong", ING's Colijn said.

At 2.00 am ET, Destatis is slated to issue Germany's GDP and final CPI data.

The figures support the European Central Bank's move to begin reducing its bond-buying programme. It nevertheless promised years of stimulus and left the door open to backtracking.

Other reports by Click Lancashire

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