The eurozone economy showed no growth in the fourth quarter of 2024, according to preliminary data released by the European Union’s statistics agency Eurostat on Thursday.
Economists had anticipated a modest 0.1% expansion, following a 0.4% growth rate in the third quarter.
The stagnant performance came as key economies within the bloc faced headwinds. Germany, the eurozone’s largest economy, saw a 0.2% contraction in GDP, while France experienced a 0.1% decline. Italy’s economy remained flat during the same period.
In contrast, Spain’s economy was a bright spot, posting 0.8% growth in the fourth quarter. Portugal also showed a strong performance, with its GDP growing by 1.5%, driven by increased private consumption, according to its national statistics agency.
The flat economic growth in the eurozone has fueled speculation that the European Central Bank (ECB) may take further action to stimulate the economy. The ECB has already implemented four interest rate cuts over the past year and was expected to announce another 25-basis-point reduction, bringing the deposit facility rate to 2.75%.
Economic analysts believe the stagnant growth highlights deeper challenges for the eurozone. Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, remarked:
“The region’s economic prospects are worse than most think. We expect this to prompt the ECB to cut interest rates by more this year than is discounted in the market.”
Despite signs of easing inflation, concerns about economic stagnation have persisted. Eurostat reported that the eurozone’s unemployment rate in December rose slightly to 6.3%, up from 6.2% in November.
Global comparisons also paint a challenging picture for the eurozone. The US economy, for instance, is projected to grow by 2.7% in 2025, maintaining strong labor market conditions and stable economic growth. US Federal Reserve Chair Jay Powell recently described the country’s economic outlook as “strong overall.”
The diverging economic fortunes between the US and the eurozone have also impacted currency markets. The euro was down 0.15% against the US dollar following the release of Eurostat’s data.
With input from CNBC, the Guardian, the Financial Times.
