Chart of the week – GDP developments in euro area

Summary: GDP fell by more than expected in most EA countries in Q4

What the chart shows: The chart shows the quarterly percent change in GDP in Q3 and Q4 2012 in the euro area and in its six largest members

Why is the chart interesting: That GDP would fall in most of the euro area in Q4 of last year was already expected before the news release on 14th February. In that sense, this is old data. But the falls were generally worse than expected, notably so in Germany, in France and in Italy (where GDP fell for the sixth consecutive quarter), and hence also for the EA as a whole. While early data for January show some recovery, notably in Germany, the numbers highlight the continued weakness of domestic demand in the single currency group. The strong euro is adding to the problems and a cut in interest rates to help weaken the currency is again becoming likely, although strongly opposed by Germany.

Chart and comments provided by Stein Brothers (UK),