Economic confidence in the euro zone has soared to its highest level since the early days of the monetary union, as the euro zone emerged from a surprisingly strong recovery after a major European election in a year.
Germany led the European commission’s official monthly measure to investigate confidence in the 28-member bloc, reversing the euro zone’s best performance. Angela Merkel (Angela Merkel) Christian Democrats stand out in the election, as the biggest party in parliament a month later, the country’s economic confidence rose 2.1 points, six year high in October.
The overall eurozone confidence index rose 0.9 points to 114.2, the highest level since January 2001 and the 14th consecutive month of gains. The rise in October was affected by the major economic sectors of the European Union, including industry, retail and construction.
The euro zone’s economic recovery has picked up further this year, with the best annual rate since the euro zone’s sovereign debt crisis accelerating and unemployment at its lowest level in nine years, according to data.
Signs of recovery in Spanish companies showed that the Catalan crisis did not weaken the country’s economic confidence index, which rose 0.3 points to a near two-year high. Official figures show that Spain’s economy was largely unaffected in the early days of the Catalan referendum on October 1st. The country’s quarterly GDP growth fell from 0.9 per cent in three months to 0.8 per cent in September.
“This year’s political tensions have had little impact on economic confidence,” said Bert Colijn, senior eurozone economist at ING. “the surprising health economy is now trumping political risk in terms of mood.”
Outside the euro zone, the UK’s economic confidence index jumped 1.5 percentage points, while France was the only spot in the main economy, dropping 1.6 points to a three-month low in October.
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The eurozone’s official GDP figures for the third quarter will be released on Tuesday, with growth expected to fall from 0.6 per cent to 0.5 per cent in the three months to September. But economists say October’s sentiment data will help the economy regain momentum by the end of the year.
“While we expect GDP growth tomorrow to show quarterly growth slowing in the third quarter, we expect growth to pick up to about 0.6 per cent in the fourth quarter,” said Stephen Brown at Capital Economics.
“This will lead to a 2.2% increase in GDP for the whole of 2017,” he added.
According to the European commission, the euro area’s industrial sector accounted for a quarter of the gross domestic product (GDP) in the European Union, at present is in a state of the least healthy, while construction from pre-crisis levels.
The growth outlook is likely to strengthen the ECB’s call for further easing of its stimulus measures after last week’s announcement of the pace of its asset purchases.