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Economic growth in the 18-member eurozone appears to be picking up momentum again, reports this week have shown, fueling speculation that the European Central Bank (ECB) could modify lending policies.
Financial information company Markit, which analyzes economic indicators in the eurozone, reported that Germany continues to lead fellow members in economic recovery, while France is slowly picking up steam.
Greece and Spain, which have been plagued with double-digit unemployment and severe austerity measures, also appeared to be rising out of recession.
“The rest of the region also enjoyed its best quarter for three years, providing further evidence that the ‘periphery’ is staging a robust-looking recovery,” Chris Williamson, chief economist at Markit, told reporters.
Germany’s economy grew by 0.4 per cent in the fourth quarter (October-December) – rising up from 0.3 per cent the previous quarter, German statistics office Destatis, said.
France, which had struggled with stagnation and recession for much of 2013, saw its GDP grow by 0.3 per cent in the fourth quarter, government data showed.
Meanwhile, the Standard & Poor’s rating agency, also said that it expects the eurozone economy to grow by 1 per cent in 2014 and 1.5 per cent in 2015.
European analysts believe that the positive figures – and outlook – could prompt the ECB to keep its key interest rates steady at the all-time low of 0.25 per cent since November, or possibly raise it in the weeks to come.
The ECB meets later this week.
According to Germany’s news magazine Der Spiegel, quoting a document from Berlin’s Finance Ministry, “an active contribution to the overcoming of the low interest policy is to be expected” from the ECB soon.
Meanwhile, the ECB has expressed concern about low inflation rates in the eurozone; the bank says that low inflation – or deflation – can postpone growth as consumers wait for bargain prices for goods and services.
Eventually, this leads to inadvertent stagnation.
In a bid to spur growth, the ECB has enacted policies to keep inflation rates at around 2 per cent throughout the eurozone.
Spain has, however, posed a problem for the central bank as its inflation rate for February was only at 7 per cent.
On Monday, the ECB will release eurozone inflation rate data for March.