Euro zone economy accelerates thanks to German 'thunderbolt'

Fri Feb 13, 2015 5:45am EST
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By Philip Blenkinsop and Alexandra Hudson

BRUSSELS/BERLIN (Reuters) - Euro zone economic growth accelerated unexpectedly in the final quarter of 2014 as the bloc's largest member, Germany, expanded at more than twice the expected rate.

A preliminary estimate showed the economy of the 18 countries sharing the euro expanded by 0.3 percent between October and December compared with the previous three months, the European Union's statistics office Eurostat said on Friday.

A Reuters poll of 51 economists had forecast a 0.2 percent expansion, the same rate as in the third quarter.

Year-on-year, euro zone growth was 0.9 percent in the fourth quarter, also 0.1 percentage points higher than expected.

The euro zone's biggest economy, Germany was a clear outperformer, growing by 0.7 percent in the quarter, far surpassing expectations of a 0.3 percent rise.

It marked a return to solid expansion in Germany after two quarters close to zero, boosting the growth rate for the whole of last year to 1.6 percent

Domestic demand lifted Germany out of its mid-year lull and allowed it to achieve 2014 growth of 1.6 percent. The Statistics Office said a significant pick up in household spending had helped overcome the summer slowdown.

"This is a thunderbolt," UniCredit economist Andreas Rees said. "Some spoke of possible recession after the summer but instead Germany rebounded. The fact that the growth comes mainly from the domestic economy gives strong grounds for optimism."   Continued...

A worker walks along rolls of Mercedes cars at a shipping terminal in the harbor of the German northern town of Bremerhaven, March 8, 2012. REUTERS/Fabian Bimmer