France and Spain beat GDP forecasts in fourth quarter
By Sean Farrell
Date: Friday 29 Jan 2021
(Sharecast News) - France and Spain's economies beat expectations in the fourth quarter, suggesting eurozone will produce a positive surprise with many countries under strict Covid-19 restrictions.
France's economy shrank 1.3% in the last three months of 2020 from the preceding quarter, easily outperforming expectations for a 4% drop despite a six-week lockdown during the period. Spain's 0.4% contraction also beat the average forecast of a 1.5% decline.
France's result meant the eurozone's second-biggest economy shrank 8.3% - the country's worst post-war downturn but better than the 11% drop the government had forecast. Spanish output fell 11% in 2020 - the worst year on record.
French consumer spending jumped 23% in December from the previous month as restrictions were eased in the runup to Christmas. Exports outstripped imports so that foreign trade contributed 0.9 percentage point to fourth quarter output.
Nicola Nobile, lead eurozone economist at Oxford Economics, said: "With today's numbers, the eurozone GDP for Q4, to be published next Tuesday, will see a positive surprise and could settle to a quarterly GDP drop of around -1.2%, from around -2% of the current consensus forecast.
"However, while Q4 has proved to be stronger than expected so far, there are not many indications that this dynamic could have continued in Q1."
Nobile said slow vaccine rollouts and fresh restrictions in many countries point to continued weakness in the eurozone over the next few months. France is waiting to hear whether the government imposes a new strict lockdown to limit Covid-19 infections.
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