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February 14, 2010    

Euro zone economy grows just 0.1% in Q4

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by Kay Murchie
Euro zone economy grows just 0.1% in Q4

Official figures have revealed the euro zone economy grew just 0.1% in the final three months of 2009, suggesting the economic recovery is faltering.

The news came after poor GDP figures from the euro zone’s largest economies. Germany, which is the euro zone‘s largest economy, said GDP remained flat in the three month period, with growth unchanged compared with the third quarter.

The area’s third largest economy, Italy, unexpectedly contracted by 0.2% in the final three months of 2009, also causing concern over its recovery.

Furthermore, the Spanish economy is still in recession after the economy contracted by 0.1% in the fourth quarter of 2009 - the seventh consecutive quarter of contraction.

Spain is now the last major economy still in recession. The country has been hit by a severe slump within the construction industry, which has led to a significant amount of job losses.

However, the euro zone’s second largest economy, France, posted a 0.6% rise in GDP for the fourth quarter of 2009 - beating analysts expectations.

The GDP results come as the Greek Government is grappling with a severe debt crisis which has weakened the value of the euro and driven Government bond yields higher.

Meanwhile, returning to the euro zone, GDP fell 4.0% over the 2009 year. Juergen Michels, economist at Citigroup, described the figures as “disappointing“.

The figures have led many analysts to believe that the European Central Bank will keep interest rates at the record low of 1% until the fourth quarter of 2010.

Furthermore, it is expected that European Governments will maintain fiscal stimulus packages to boost their economies.

In related news, Eurostat recently revealed the number of people unemployed across the euro zone grew to 15.8 million in December.

The latest figures mean that the unemployment rate across the 16 countries that use the euro is 10% - the highest rate since 1999.

Analysts believe that the unemployment rate will continue to rise across the region in the coming months.

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