Euro area GDP growth picks-up slightly in the fourth quarter of 2018

Economic growth in the euro area picked-up slightly at the end of 2018, official data confirmed, but the difference between the bloc's performance over the two halves of last year was stark.

According to Eurostat, the euro area's gross domestic product advanced at a quarter-on-quarter pace of just 0.2% over the final three months of the year, as expected, after growth of just 0.1% over the preceding three months.

But that remained a far cry from the 0.4% clip observed over the first two quarters, resulting in a slowdown in the year-on-year pace of growth from the 2.4% clip in the first quarter of 2018 to just 1.6% in the third quarter and 1.1% over the three months to December.

The slowdown was sharpest in Germany, the Eurozone's largest economy, with GDP growth having come to an abrupt halt in the third quarter, indeed shrinking by 0.2%, after an expansion of 0.5% in quarter two.

Over the final three months of the year, German GDP was only flat quarter-on-quarter.

In parallel, Italian GDP fell for a second consecutive quarter, retreating by 0.1% in the last three months of the year, resulting in no growth in year-on-year terms.

Growth in the Netherlands staged a solid rebound, from a 0.1% pace over the third quarter to 0.5% in the fourth, alongside steady growth of 0.3% in French GDP over the same time frame.

While in Spain GDP growth accelerated from 0.6% to 0.7%.

The rate of growth within the single curency bloc meanwhile increased at a quarter-on-quarter pace of 0.3%.

Thursday's data arrived even as the European Central Bank was set to update its staff macroeconomic projections, possibly paving the way for further stimulus measures, including a delay in the timing of the first interest rate hike.

Perhaps significantly, at least some analysts had called into question the ECB's forecasts for a re-acceleration in growth in the back half of the year.

Nevertheless, ahead of the ECB's policy decision later in the day, economists at Bank of America-Merrill Lynch said: "The 'make or break' meeting moves potentially as late as June. If the downside risks materialise by then, we would expect radical changes to forward guidance pushing the first chance of a rate hike beyond what is currently priced with some 'tiering' thrown into the package.

"Our baseline is not changed. We expect economic improvement from late spring allowing the Council to push forward guidance by only a few months."