Euro Area: GDP growth takes a hit in Q4
The economy grew 0.3% in seasonally-adjusted quarter-on-quarter terms in Q4, notably below Q3’s 2.3% expansion. Compared with Q4 2020, seasonally-adjusted annual GDP increased 4.6% in Q4 2021, following the 3.9% rise recorded in Q3.
The quarterly deceleration came amid continued global supply bottlenecks, a waning rebound effect and the tightening of Covid-19 restrictions due to the spread of Omicron. Said restrictions weighed on business activity, especially in the services sector, and on household spending. In terms of individual countries, Spain’s economy expanded 2.0% over the previous quarter in Q4 2021, France’s GDP increased 0.7% and Italy’s economy grew 0.6%. Output in Germany fell 0.7%, significantly restrained by supply constraints.
Commenting on the short-term outlook, Bert Colijn, senior Eurozone economist at ING, stated:
“Don’t expect a swift recovery, though; GDP growth is likely to remain feeble in Q1. While supply chain disruptions have eased slightly, we expect them to continue to dampen manufacturing growth and inflation is set to weigh on purchasing power which dampens the outlook for household consumption. While the economy is showing increasing resilience to Covid-19 waves, the winter dip in growth is hard to avoid at this phase of the pandemic. Expect growth rates to pick up from the second quarter once again.”
More comprehensive results for Q4 2021 are scheduled to be released on 15 February.