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Economy in Brief

GDP Growth in the Euro Area, Germany, France, Italy, Spain and the NetherlandsĀ 
by Louise Curley February 13, 2007

2006 was a good year for the euro area. Eurostat estimates that the Euro Area's Gross Domestic Product in real terms grew 0.9% in the fourth quarter of the year over the third quarter and was 3.3 above the fourth quarter of 2005. These figures suggest that growth in 2006 was 2.8%, the highest rate for the area since 2000.

The four largest members of the euro area--Germany, France, Italy and Spain--as well as the Netherlands released fourth quarter data on GDP growth today. Among these countries, Germany was the big standout. Its GDP grew 0.87% in the fourth quarter and was 3.72% over the fourth quarter of 2005. Growth for all of 2006 was 2.79%. GDP growth in Italy in the fourth quarter increased sharply to 1.13% from 0.33% in the third quarter and was 2.87% over the fourth quarter of 2005. However, because of slow growth earlier in the year, the annual rate of growth was barely 2.0%. The year over year increases in GDP in Italy are compared to those in Germany in the first chart.

France also increased its GDP growth rate sharply in the fourth quarter of 2006 to 0.65% from 0.01%in the third quarter and was 2.27% above the fourth quarter of 2005. But GDP growth in France, like that in Italy was slow earlier in the year, as a result, growth for the year was just over 2.0%. Spain continued to be one of the high growers in the area. GDP in Spain was up 1.1% in the fourth quarter from the third and was 4% over the fourth quarter of 2005. For the year, Spain's GDP grew 3.79%. GDP growth in the Netherlands fell slightly in the fourth quarter to 0.64% from 0.72% in the third quarter and the year over year growth rate fell from 2.96 to 2.91%. For the year as a whole, GDP growth was 2.85%. The quarter to quarter and year to year growth rates of GDP are shown in the table below together with the annual growth rates of the past three years.Note: Eurostat and several euro area countries release flash estimates of Gross Domestic Product growth about a month and a half after the close of the quarter. Other countries within the euro area release preliminary estimates of GDP and its composition. Today France, Spain and Eurostat for the whole Euro Area released flash estimates of growth in the fourth quarter of 2006. France provides estimates of quarter to quarter growth only while Spain and Eurostat provide both quarter to quarter and year to year growth rates. The flash estimates have been good indicators of the actual growth rates as can be seen in the second chart that compares the flash estimates of the year over year changes in Euro Area growth and the actual changes.

Germany, Italy and the Netherlands released preliminary estimates of GDP and its composition..

GROWTH RATES OF REAL GDP   Q4  06 (%) 3Q 06 (%) 2Q 06 (%) 1Q 06 (%) 2006 (%) 2005 (%) 2004 (%)
Y/Y Change
Euro Zone) 3.3 2.7 2.9 2.2 2.79* 1.46 1.74
  Germany 3.72 3.11 2.82 1.90 2.89 1.10 0.77
  France 2.27# 1.85 2.58 1.33 2.01* 1.21 2.03
  Italy 2.87 1.66 1.70 1.73 1.99 0.11 0.88
  Spain 4.0 3.82 3.72 3.61 3.79* 3.53 3.26
  Netherlands 2.91 2.96 2.96 2.59 2.85 1.53 1.95
Q/Q Change
Euro Zone 0.90 0.53 0.99 0.82 -- -- --
  Germany 0.87 0.79 1.18 0.84 -- -- --
  France 1.65 0.01 1.13 0.46 -- -- --
  Italy 1.13 0.33 0.61 0.78 -- -- --
  Spain 1.1 0.93 0.93 0.95 -- -- --
  Netherlands 0.69 0.72 1.21 0.30 -- -- --
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