Eurozone: GDP is growing in line with expectations - Rabobank

Research Team at Goldman Sachs, notes that yesterday the Q3 GDP growth (q-o-q) for the Eurozone came in at 0.3%, in line with expectations and equal to the growth rate in the second quarter and despite the fact growth in the Eurozone’s largest country, Germany, came in at just 0.2%; below the 0.3% expected.

Key Quotes

“Household and government spending increased while trade dragged on growth as exports decreased and imports increased. Amidst ongoing uncertainty, business investment is still low compared to historical levels, which does not signal growth will pick up strongly in the coming quarters. The recent weakening of the euro is not guaranteed to be a boon for German exporters either, as Brexit and potential Trump trade hurdles may further slow what is already weak global trade. All things considered, the German economy is well on track for a decent 2016, though.”

“The small hiccup in German GDP was compensated for elsewhere in Europe. The Italian economy grew by 0.3%, beating expectations of 0.2% growth, after stalling in Q2. PM Renzi may try to use this return to growth to strengthen his case somewhat going into the referendum. However, following Trump’s victory, concerns have once again heightened regarding the 4 December plebiscite, which has the potential to unleash additional political uncertainty in Italy, and in Europe. Finally, both the Dutch and Portuguese GDP numbers came in above expectations, where the former was primarily driven by consumer spending and the latter by an increase in exports.”