Euro-Area Growth Boosted by Domestic Demand as Trade Dragged

  • Eurostat confirms fourth-quarter economic expansion of 0.4%
  • ECB set to publish updated projections after meeting this week

Domestic spending drove euro-area growth in the fourth quarter of 2016, with trade damping output.

Gross domestic product rose 0.4 percent, matching earlier estimates and the rate of expansion in the previous quarter. Household consumption added 0.2 percent point to growth, while government spending and investment contributed 0.1 point each, the European Union’s statistics office said on Tuesday.

Recent economic data have highlighted the strength of the euro-area recovery, with a gauge of investor confidence jumping to the highest level since before the global financial crisis. Together with an inflation rate that has quadrupled to 2 percent in just four months, that’s put pressure on European Central Bank policy makers to map out an exit from unconventional stimulus.

ECB President Mario Draghi is pushing back against such calls, arguing the price spike is mainly due to energy and that underlying pressures remain weak. The central bank will publish updated projections this week after the Governing Council gathers for one of its regular policy-setting meetings.

Imports outpaced exports in the fourth quarter, with net trade subtracting 0.1 percentage point from GDP, according to the report. Household and government consumption rose 0.4 percent each, and investment was up 0.6 percent.

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