Germany is cruising at a steady if unspectacular pace, according to the latest GDP figures, but Italy is barely growing and Spain's CPI data points to persistent worries over deflation. David Pollard reports.
Amid a dearth of positive signals, Germany reporting steady growth should be a welcome plus. Its economy grew by 0.3 percent in the final three months of 2015. Euro zone GDP reported at the same rate. Both in line with the consensus forecast. If anything, though, we should look elsewhere for a true reading, says Charles Stanley's Jeremy Batstone-Carr. (SOUNDBITE) (English) CHARLES STANLEY, CHIEF ECONOMIST, JEREMY BATSTONE-CARR, SAYING: "We've seen some very weak industrial production data both from Germany and from France at the back end of 2015. That is a core component of regional GDP." The other core component, he says: retail sales. (SOUNDBITE) (English) CHARLES STANLEY, CHIEF ECONOMIST, JEREMY BATSTONE-CARR, SAYING: "There too, there has been some weakness, and this is serving to cause some anxiety, I suspect, across regional governments and indeed in Frankfurt at the European Central Bank." And less comforting still is a snapshot of other data. Italy growth up just 0.1 per cent on the quarter. Portugal - just 0.2 per cent. German inflation confirmed to have sunk 0.8 per cent month on month in January. Spanish inflation down a whopping 1.9 per cent month on month. With the slowdown in China - and the prospect of a possible currency devaluation there - putting no-to-lo inflation - even deflation - on the agenda for some time yet. (SOUNDBITE) (English) CHARLES STANLEY, CHIEF ECONOMIST, JEREMY BATSTONE-CARR, SAYING: "There is quite a significant deflationary pulse emanating to the West from the East. The weakness in the commodity complex exacerbates, that. So, yes, central banks at this precise moment in time are a million miles away from their medium-term inflation forecasts." Market meltdown or not, investors may find little comfort in these latest euro zone numbers.