Eurozone economy records worst year since 2013

France has endured a series of strikes over the winter that have hurt business while Italy’s economy has struggled for years to grow at all.

31 January 2020 | 15:19

Source: Associated Press

  • Source: Associated Press
  • Last update: 31 January 2020 | 15:19

A rainbow fills the sky over the Elysee Palace in Paris, Friday, Jan. 17, 2020. (AP Photo)

LONDON: The eurozone economy, which is made up of the 19 countries that use the euro currency, ended 2019 with a whimper and recorded its worst year of growth since the height of the single currency bloc’s debt crisis in 2013.

In its first estimate for the quarter, statistics agency Eurostat said the eurozone grew by only 0.1% from the previous three-month period, its lowest rate since the first quarter of 2013.

The growth recorded was lower than the 0.2% anticipated in the markets and was largely due to the fact that two of the eurozone’s biggest economies, France and Italy, both contracted. According to their respective statistics agencies, their economies shrank by 0.1% and 0.3%.

France has endured a series of strikes over the winter that have hurt business while Italy’s economy has struggled for years to grow at all.

Eurostat did not provide further detail to illustrate why growth was so low and many countries have still to report quarterly numbers.

The figures highlight how the eurozone has lost steam amid worries over a trade war between the U.S. and China that is having knock-on effects around the world.

For 2019 as a whole, the eurozone grew by only 1.2%, its lowest rate since 2013, when it shrank by 0.2% as several countries, particularly Greece, were mired in a recession that threatened the very future of the euro.

In a separate report, Eurostat found that the annual rate of inflation across the eurozone rose to 1.4% in January from 1.3% the previous month. However, the core rate, which strips out volatile items such as food and energy, fell to 1.1% in January from 1.3%.

By whatever measure, inflation remains below the European Central Bank’s goal of just below 2%. The ECB is running a stimulus program to nudge up inflation and growth, but is also undergoing a thorough review of how it tries to do that, including whether it should change its inflation target.

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