The Greek economy is the ninth largest within the Eurozone and has a GDP of roughly one fifteen the size of Germany’s, but, perhaps understandably, current focus is on whether or not Greece will be granted a four month extension of its current bailout and under what conditions.
However, important economic data has recently emerged from Eurostat showing that the GDP of the 19 states which use the Euro picked up in Q4 2014 by 0.3%, a stronger level of performance than anticipated by analysts. Taken over the full year, the Eurozone produced growth of 0.9%.
The Eurozone is a very heterogeneous bloc in many economic terms from inflation to growth and unemployment, so naturally some countries have fared better than this average value and others worse. Germany’s economy is the largest within the block and so its economic performance is a key factor in the fate of the rest of the block; crudely, it contributes about 1/6 of the bloc’s GDP.
The German economy grew by 0.7% in Q4 2014, returning full year growth of 1.6%. However, the second largest economy, France, only managed 0.1% growth in Q4 with annual growth of just one quarter of Germany’s coming in at 0.4% - but at least still positive.
Greece, Cyprus and Finland were the only Eurozone economies to see GDP contract in the fourth quarter of the year. Greece had finally emerged from recession in Q1 and posted growth in the second and third quarters of the year. According to Eurostat, the Greek economy contracted by 0.2% in Q4 whereas the Greek statistical agency suggested Q4 growth of 1.7%. Irrespective of which figure is correct (and the Eurostat figure is likely to prove most reliable), the Greek economy will face a catastrophe if it fails to secure an extension of its ECB/IMF/EU bailout before the end of February.