Eurozone Q4 GDP growth in line as Omicron slows recovery
Economic growth across the eurozone slowed at the end of 2021, as the Covid Omicron variant hindered the recovery from the pandemic, according to official data released on Monday.
GDP across the single currency area rose by 0.3% in the October-December quarter, a marked slowdown from the 2.3% expansion recorded in the preceding three months.
Germany recorded a 0.7% contraction, acting as an anchor, as renewed restrictions were imposed in some European countries, as Omicron cases surged – hitting the service sector.
GDP in Europe’s biggest economy contracted by 0.7% in the quarter, as its economy suffered from a surge in virus cases and ongoing supply chain disruption which.
The German government also introduced restrictions on unvaccinated citizens in December, while some Christmas markets were cancelled.
On the upside, France recorded a better-than-expected 0.7% expansion and Spain 2%. Italy grew by 0.6% and Portugal 1.6%.
Eurostat also estimated that the eurozone, and the wider European Union, grew by 5.2% during 2021 as the region recovered from the 2020 recession sparked by the pandemic.
Analysts at Pantheon Macroeconomics said the overall figure was in line with expectations and the recovery was “unlikely to gain steam at the start of this year”.
“While this advance report does not contain details, we are confident that domestic demand drove the increase in GDP last quarter. Net trade probably boosted growth too, but by less than domestic demand,” they said.
“Q4’s performance means EZ GDP was back at it pre-virus level at the end of last year, and grew by 5.2% over 2021 as a whole. This year, business surveys, such as Markit’s composite PMI, and near-real-time data suggest that the economy is starting off on weak footing. But we expect growth to rebound from Q2, and look for GDP growth of 3.8% for 2022 as a whole, below the ECB’s latest estimate, 4.2%.”