Pedestrians wear protective face masks while passing stores and cafes on Rue Montorgueil in Paris, France, on Wednesday, Aug. 26, 2020.
Bloomberg | Bloomberg | Getty Images
The euro zone economy eked out 0.2% growth in the third quarter, just beating expectations, according to flash data from Eurostat on Thursday.
Economists polled by Reuters had anticipated the bloc’s economy to expand by 0.1% between July and September.
The euro zone economy recorded 0.1% growth in the second quarter, following a 0.6% expansion in the first.
Growth in the single currency area was boosted by Spain and France, with the former reporting a 0.6% expansion in the third quarter and the latter registering 0.5% growth (significantly higher than analysts’ expectations for 0.2% growth) despite a backdrop of political instability.
Germany and Italy were drags on the growth rate, however, as both countries’ economies stalled.
The data — which indicates an unexpected economic resiliency — comes ahead of the European Central Bank’s next monetary policy decision, due later Thursday, and removes any immediate pressure on the central bank to cut rates to stimulate the economy.
The central bank is widely expected to keep its key deposit facility rate at 2% at the meeting, having last cut rates in June. The trim came as the euro zone’s annual inflation rate hit 2%, the ECB’s target, though the rate of price rises has risen since, to 2.2% in September.
Despite a lackluster growth outlook, economists say the central bank is unlikely to cut interest rates again for a while.
“The ECB’s rate cutting cycle appears to be over, at least for now, with firmer business activity and rising inflation leaving few doubts that the Governing Council will sit on its hands for a while yet,” Matthew Ryan, head of Market Strategy at financial services firm Ebury, said in emailed comments.
