Euro area: signs of improvement for growth, Greece worries – Liberation

Euro area: signs of improvement for growth, Greece worries – Liberation

The growth in the euro zone was slightly better than expected in 2014, due to lower oil prices and the euro by year-end, but the return of the Greek crisis casts a veil of uncertainty on the recovery.

Over the whole of last year, gross domestic product (GDP) in the euro area grew by 0.9% against 0.8% expected by the European Commission through the good figures for the fourth quarter.

From October to December, GDP actually grew by 0.3%, according to Eurostat. Analysts had forecast growth of only 0.2%, as in the third quarter.

“The reasons for this shift are quite obvious,” said Mirco Bulega, an analyst at Credit Suisse, citing the oil price collapse and recent announcements from the European Central Bank (ECB) to fight against deflation and stimulate the economy. Signs which, he said, go in the direction of improvement of the economy in 2015 and in addition to the decline of the euro, favorable to exporters.

More nuanced, Jennifer McKeown of Capital Economics, said that the oil price decline and the weakening of the euro offset “for now” the effects of the Greek crisis. “But growth is too low to reduce the risk of deflation and an economic slowdown is not excluded,” she says.

“Obviously, there is a risk that the file Greek eventually hit the economy in the euro zone. We doubt it, but accidents can happen and nobody really knows what is the degree of effectiveness of measures and safeguards that would be implemented if Greece left the euro zone, “says Howard Archer, economist at IHS Global . Insight

– Sword of Damocles –

The end victory January of the Radical Left (SYRIZA) in Greece has changed the situation in Europe. The new government is determined to get rid of the troika of creditors (EU, ECB and IMF) and of the measures imposed since 2010. Very difficult discussions are underway between Athens and the euro area, which should be concluded quickly Otherwise, the country may find themselves short of money and being rushed out of the euro.

In addition to questioning the European project, a “Grexit” would inevitably have consequences economic. A crucial meeting of finance ministers of the euro zone stands in Brussels on Monday. Meanwhile, growth resumed downward end of 2014 in Greece, with a decrease of 0.2% of GDP.

Without this sword of Damocles, there is reason to hope for economy in the euro zone. It was supported by the end of 2014 consumption and the health of Germany, which has regained its leading role. Its growth was slightly better than expected last year, reaching not at 1.5% but 1.6%, thanks to a last quarter stronger than expected (+ 0.7%).

Spain also posted solid growth in the fourth quarter to 0.7%, and is expected to reach 1.4% for the full year, according to initial estimates of Spanish statistics institute. The fourth largest economy in the euro zone, hit by massive unemployment, is expected “soon return to its pre-crisis growth levels,” said Credit Suisse analyst.

However, France remains behind with growth of 0.1% in the fourth quarter and 0.4% for the year. At issue: the investment, which remains down. Same disappointment in Italy in recession in 2014 (-0.4%), with growth stopped at the end of the year.