ROME: German and Italian growth fell short of forecasts, casting doubt on the strength of two of the euro area’s biggest economies amid global uncertainties.
German gross domestic product rose a seasonally-adjusted 0.4 percent in the three months through December, while Italian GDP expanded 0.2 percent, according to the nations’ statistics offices. Both figures missed predictions in Bloomberg surveys by 0.1 percentage point.
While Italy has lagged growth in the 19-nation euro area, Germany — which had annual growth of 1.9 percent last year — has driven Europe’s slow but steady recovery, aided by a weak euro, cheap oil and the European Central Bank’s stimulus policies. While those tailwinds boosted consumer spending and supported exports, rising inflation pressures and uncertain prospects for global trade have cast doubt over whether the pace of expansion can be maintained.
German fourth-quarter GDP was led by domestic demand, the statistics office said. Government spending increased markedly, and households raised consumption slightly. Investment also developed positively, bolstered by building. With imports outpacing exports, net trade was a drag on growth.
“The data are alright — German growth is solid, and impulses came exactly from where we expected them to do,” said Marco Wagner, an economist at Commerzbank AG in Frankfurt. “Growth drivers will be similar in 2017.”
