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Euro area growth drops less than expectations

Euro area growth drops less than expectations

Preliminary estimates for the eurozone showed that the region’s economy contracted less than expected during the last quarter of 2020, in light of the closures caused by the Coronavirus pandemic, while large economies such as Germany and Spain are still witnessing slight growth.

Eurozone GDP index during the fourth quarter witnessed a contraction of 0.7% after the third quarter witnessed an average growth of 12.5%, while expectations indicated a contraction of growth of 0.9%.

As for the annual GDP during the fourth quarter, it witnessed a contraction of 5.1%, after the previous reading saw a contraction of 4.3%, and expectations indicated a contraction of 6.0%.

In the third quarter, the eurozone eased restrictions on travel and entertainment after the first wave of cases of Covid-19 virus, but with the entry of the fourth quarter and the return of the second wave of high infections, most countries returned to closure measures.

Preliminary Eurostat data showed that the second and third largest economies in the euro area, France and Italy, showed in the final results the quarterly GDP contracting by 1.3% and 2.0%, respectively. Meanwhile, Germany posted 0.1% growth in the third quarter and Spain posted 0.4% growth.

As for the levels of the euro, it witnessed a decline against the dollar, after the declining growth data in the euro area, which pushed the single European currency to decline to its lowest level in two months against the dollar.

The euro against the dollar recorded its lowest level in two months at the level of 1.2031 after it opened trading today at the level of 1.2057. This comes in light of the strength of the US dollar against major currencies for the second day in a row.

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