Europe’s economy shrank less than economists forecast in the fourth quarter as a better-than- predicted performance in Germany and France helped mitigate the region’s first contraction since 2009.
Gross domestic product in the 17-nation euro area fell 0.3 percent from the prior three months, the first drop since the second quarter of 2009, the European Union’s statistics office in Luxembourg said today. Economists had forecast a drop of 0.4 percent, the median of 42 estimates in a Bloomberg News survey shows. In Germany, Europe’s largest economy, GDP dropped less than economists projected in the fourth quarter, while France’s economy unexpectedly expanded in that period.
German companies have boosted output and spending over the past year to meet export demand, helping soften the impact of tougher budget cuts from Spain to Ireland. While Moody’s Investors Service cut the ratings of six of the region’s member states on Feb. 13, saying policy makers haven’t done enough to restore investor confidence, the economy is showing some signs of stabilization. Euro-region economic sentiment improved in January and services output expanded.
“It could have been worse,” said Martin van Vliet, an economist at ING Group in Amsterdam. “The debt crisis has thrown the euro-zone recovery into reverse. The recent improvement in leading indicators suggests there is a fair chance that the euro-zone economy as a whole might not shrink further in the first quarter.”
