Eurozone grows in Q4, as hopes rise for a deal with Greece
Lower oil prices, EU stimulus and falling euro combine to boost growth, especially in Germany
There was good news out of the eurozone on Friday, with fresh hopes for a deal with Greece and data showing stronger-than expected growth.
Statistics agency Eurostat said gross domestic product in the 19-country eurozone expanded by 0.3 per cent in the fourth quarter, powered by strong growth in Germany.
For 2014 as a whole, GDP grew by 0.9 per cent, putting to rest predictions of a recession, at least for now.
Domestic demand and exports helped Germany’s economy grow 0.7 per cent in the quarter and 1.9 per cent for the year.
"Some spoke of possible recession after the summer but instead Germany rebounded. The fact that the growth comes mainly from the domestic economy gives strong grounds for optimism," UniCredit economist Andreas Rees said.
Germany the leader
The fall of the euro against the U.S. dollar has helped boost Germany’s export-driven industries. And lower energy prices because of dropping oil prices are helping throughout the eurozone.
France and Italy lagged, but other economies appeared stronger after the European Central Bank brought in negative interest rates. Early this year, it also launched a massive government bond-buying stimulus program.
There is still doubt about the prospects for Europe in 2015.
"Hopes rest largely on the success of the stimulus program, but the situation is likely to remain precarious for the foreseeable future," said Dennis de Jong, managing director at UFX.com.
Among eurozone members, only three recorded a contraction in their economy: Greece, Finland and Cyprus.
The future of Greece has hung over Europe, as the country’s new government attempts to renegotiate the austerity terms imposed by its lenders.
Greece, EU still talking
On Thursday, Greece and the EU agreed to start technical discussions on Greece's request for a bridge loan to take it until June, instead of an extenstion of its bailout program that ends Feb. 28.
Talks will continue behing doors through the weekend and then go before a meeting of eurozone finance ministers on Monday. Greek Prime Minister Alexis Tsipras wants to scrap the country's current bailout program and replace it with a new one with easier repayment terms and fewer budget austerity measures.
Greece has become increasingly indebted as it attempts to meet the terms of the bailout and widespread unemployment and lower wages are making it more difficult for the government to tax its citizens.
Greece’s economy contracted by 0.2 per cent in the fourth quarter, after three quarters of growth.
With files from Associated Press