Two of the eurozone’s four largest economies ended last year suggesting that the region can avoid a deeper recession, while still facing headwinds from extended lockdowns amid the COVID-19 pandemic.
Spain’s GDP unexpectedly increased 0.4 percent, defying expectations for a 1.4 percent drop. Output in France fell a less-than-expected 1.3 percent, after consumer spending rebounded sharply in December.
While data signal that businesses have found ways to cope with restrictions, the outlook in both countries — as in much of the rest of the region — remains gloomy.
The spread of more infectious COVID-19 variants raises the risk of longer curbs and a greater need for stimulus.
European Central Bank President Christine Lagarde has said that the bank would bolster support if needed.
The delay of COVID-19 vaccines risks another existential crisis, with the EU paving the way to bigger pandemic bailouts for companies.
High-frequency indicators show that activity this month remains subdued.
Spanish growth at the end of last year was driven by a strong increase in household consumption. While that is good news, it still leaves output down 10 percent for the whole of last year.
That makes Spain one of the worst-affected countries in Europe.
The outsized importance of tourism for Spain’s economy and the relatively small size of its companies, compared with its European peers, have left the nation particularly vulnerable to travel restrictions and shop closures.
The Austrian economy contracted 4.3 percent last quarter, after a surge in infections forced the nation into a second lockdown.
Private consumption in Austria slumped at nearly twice that rate, with tourism, trade and leisure also weighing down output.
Separate data in France showed that pricing pressures remained weak in industry at the end of last year, confirming concerns about low inflation.
French producer prices in December were down 1.2 percent on the year, with particularly strong declines for manufactured goods, as well as coking and refining output.
With restrictions in place during much of the fourth quarter, consumption was down 5.4 percent.
However, business investment continued to grow, increasing 1.5 percent after a 21 percent surge in the previous three months, while exports rose 4.8 percent.
The smaller-than-expected fall at the end of last year means that France’s GDP for the whole of last year fell 8.3 percent.
French authorities are considering tightening restrictions beyond a 6pm to 6am curfew, but French Minister of Economy and Finance Bruno Le Maire has said another lockdown should be a last resort.
Such a move would stop the economy from meeting the official forecast of 6 percent growth for this year, Le Maire said.
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