Business

Eurozone economic growth slightly weaker than expected

Worker assembles a motorbike
Image caption This was the second consecutive quarter of 0.3% growth in the 16 countries using the euro

The eurozone economy grew by 0.3% in the final quarter of 2010, slightly weaker than expected.

This was the second consecutive quarter of 0.3% growth in the 16 countries using the euro at the time.

Compared with the same quarter in the previous year, GDP had increased by 2.0%, said Eurostat, the European Union's statistics office.

The growth figure for the 27 countries that make up the EU as a whole was 0.2% in the fourth quarter.

For 2010 as a whole, GDP increased by 1.7% in both the eurozone area and the full EU area.

Weather impact

Earlier it was announced that the French and German economies both grew in the fourth quarter of 2010, but by slightly less than expected.

In Germany, the economy grew by 0.4% in the final three months of the year, according to the Federal Statistical Office, Destatis, while for 2010 as a whole it grew by 3.6%.

The French economy grew by 0.3% in the fourth quarter of 2010, according to the national statistical agency, Insee. Over the whole year, GDP grew by 1.5%.

The French economy had contracted by 2.5% in 2009, the steepest decrease since World War II.

Economists had been predicting slightly higher growth rates for both countries.

"This will be disappointing for the market... but at the same time we have seen very good industry surveys so we can expect other growth engines, exports and investment, those are the drivers that will count," said Dominique Barbet, economist at BNP Paribas.

Fourth quarter German growth was thought to have been hampered by particularly harsh winter weather.

Andreas Rees, an economist at Unicredit, said: "There is really only one important reason why growth slowed: the winter weather. There is no reason for concern. This is not the beginning of the end of the recovery, just a pause."

Peripheral economies

While economic giants like France and Germany are recording growth, the troubled periphery of Europe is contracting.

In the final quarter of the year, Portuguese GDP diminished by 0.3% and Greece shrank by 1.4%, compared with the previous three months.

The Portuguese government is currently implementing tough austerity measures, in an attempt to avoid the need for an EU bailout similar to those already extended to Greece and the Irish Republic.

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