Eurozone's economic recovery stalls in Q4

Eurozone GDP growth in the fourth quarter of was 0.1% over the previous three months, short of the 0.3% figure economists were expecting. In the third quarter, GDP had risen by 0.4%. Fiscal issues of Greece and a struggling German economy were among the key factors dragging on growth. The recession in Greece deepened, with GDP falling 0.8% in the fourth quarter after a 0.5% slump in the previous three months, European Union’s (EU) statistics office in Luxembourg said on Friday. The German economy stagnated in the fourth quarter after recording 0.7% growth in the previous three months, while Italian GDP fell 0.2%. France’s economic expansion accelerated to 0.6% from 0.2%. From a year earlier, euro-area GDP declined a seasonally adjusted 2.1% in the fourth quarter. For the full year, the economy contracted 4%. Separate data showed that industrial production in the region fell 1.7% in December, the most in 10 months.

As market turmoil pushes bond yields higher across southern Europe, the recovery is in danger of losing momentum. European policymakers are struggling to come up with a plan that allays concerns about the credit worthiness of the euro zone’s peripheral economies. The euro has fallen 7% in the last two months on concern that Greece’s fiscal problems will spread to other countries. Earlier this week, EU leaders ordered Greece to get its deficit under control and pledged determined and coordinated action to protect the region from any possible fallout from Greece’s debt crisis, but stopped short of setting out concrete steps.