February 15, 2011
The euro zone's economic recovery slowed slightly in the last quarter of 2010, as heavy snow in Germany and some other parts of Europe took a toll on business.
Gross domestic product in the 17-nation euro currency area grew at an annualized pace of 1.2% in the fourth quarter, according to a preliminary estimate by the European Union's statistics arm. The growth rate was down from 1.4% in the third quarter, disappointing analysts who had expected it to strengthen.
Economists said temporary factors—particularly the unusually cold weather in December—hit construction and some other activities, and that monthly business surveys show an underlying improvement, particularly in Europe's economic heartland, Germany and its immediate neighbors. "The first quarter should be better," said Greg Fuzesi, economist at J.P. Morgan in London.
The year ahead could prove challenging for the euro zone, however. Fiscal austerity policies, rising food and energy prices, and slowing global trade are expected to weigh on European consumers and companies. The continuing debt crisis on the euro zone's periphery and the weakness of parts of Europe's banking system still have the potential to derail the recovery, economists warn.
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