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 A preliminary estimate showed the economy of the 18 countries
sharing the euro expanded by 0.3 percent between October and
December compared with the previous three months, the European
Union's statistics office Eurostat said on Friday.
A Reuters poll of 51 economists had forecast a 0.2 percent
expansion, the same rate as in the third quarter.
Year-on-year, euro zone growth was 0.9 percent in the fourth
quarter, also 0.1 percentage points higher than expected.
The euro zone's biggest economy, Germany was a clear outperformer,
growing by 0.7 percent in the quarter, far surpassing expectations
of a 0.3 percent rise.
It marked a return to solid expansion in Germany after two quarters
close to zero, boosting the growth rate for the whole of last year
to 1.6 percent
Domestic demand lifted Germany out of its mid-year lull and allowed
it to achieve 2014 growth of 1.6 percent. The Statistics Office said
a significant pick up in household spending had helped overcome the
summer slowdown.
"This is a thunderbolt," UniCredit economist Andreas Rees said.
"Some spoke of possible recession after the summer but instead
Germany rebounded. The fact that the growth comes mainly from the
domestic economy gives strong grounds for optimism."
France could not keep pace, growing by just 0.1 percent, meaning the
euro zone's second largest economy advanced by just 0.4 percent
across the whole of 2014. Italy fared even worse.
"It's obviously still too weak, but the conditions are ripe to
permit a cleaner start of activity in 2015," said French finance
minister Michel Sapin, adding that business leaders were already
beginning to increase investment.
On Monday, France's central bank predicted first quarter growth of
0.4 percent, led by a rise in industrial production and a slight
improvement in services activity.
With Greece's place in the euro zone again uncertain, there is
plenty of turbulence for the currency bloc to contend with.
But a halving of the price of oil and the prospect of the European
Central Bank buying more than 1 trillion euros ($1.1 trillion) of
government bonds with new money over the next 18 months should start
to spur growth.
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Latest data suggest a slightly more buoyant start to the year. The
January purchasing managers survey produced the best showing for
euro zone firms since mid-2014 and pointed to first quarter growth
of 0.3 percent.
ITALIAN PAIN, SPANISH GAIN, GREEK DIP
In Greece, the economy contracted by 0.2 percent in the final three
months of last year after three consecutive quarters of growth. That
marked a 1.7 percent increase from the same period a year earlier,
but was below the 2.2 percent forecast.
The twice-bailed-out country's economy had been expected to show it
has put a long and savage recession behind it, at least while it
remains firmly part of the euro zone.
Italy's economy stagnated in Q4, marking the 14th consecutive
quarter without any growth as an increase in exports was offset by
weak domestic demand.
Over the whole of 2014 GDP fell 0.4 percent, the third consecutive
decline after contractions of 1.9 percent in 2013 and 2.3 percent in
2012.
Spain released its Q4 figures two weeks ago and boasted quarterly
growth of 0.7 percent, the fastest in seven years.
Economy Minister Luis de Guindos told Reuters last week that
forecasts for 2015 could soon be lifted as high as 3 percent.
The Dutch economy grew a healthy 0.5 percent in the fourth quarter.
(Additional reporting by Alexandria Sage in Paris and Gavin Jones in
Rome; Writing by Mike Peacock; Editing by Catherine Evans)
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