French preliminary GDP declined to 0.2% q/q in the fourth quarter as private consumption decreased due to November's terror attacks. Capital spending grew at a slower pace, however, imports increased at a faster rate as compared to exports.
Spain' GDP edged down to 0.8% in the third quarter, while Belgium and Austria GDP grew by 0.3% q/q in the fourth quarter. These economies contribute to 40% of Eurozones GDP.
Germany and Italy's fourth quarter data is yet to be released; however, markets expect the economies to grow by 0.3% and 0.2%, respectively. Downside risk is likely to weigh on German economy as retail sales showed no improvement in the fourth quarter, while industrial production decreased to 0.7% in the third quarter. However, construction and service sector performance were comparatively better than other sectors.
"For the release of Q4 GDP data on Friday, we expect a modest 0.3% q/q increase - food for the doves in the ECB. Despite the turmoil on financial markets, a pick-up in Q1 is still possible.... However, IF we get a weak winter half-year, the ECB's projection and our own