Euro area economy expands in third quarter

The euro area economy expanded in the third quarter. A flash estimate of Eurozone GDP (seasonally adjusted) came in at 0.1 per cent, just below expectations of a 0.2 per cent rise and after 0.3 per cent growth in the second quarter.

Jonathan Loynes of Capital Economics says that the fragility of the Eurozone recovery and the "growing dangers of a damaging bout of deflation" are underlined by the fact the economy has almost ground to a halt.

The figures are, nevertheless, says Loynes, "a clear blow to hopes that the period of market stability seen over the last year or so would translate into a solid and sustained economic recovery". Capital Economics continues to expect the Eurozone to grow by just 0.5 per cent or so next year, "well short of the rates needed to head off the growing dangers of deflation and address the region’s ongoing debt crisis."