Data indicate that the three biggest economies in the eurozone, France, Germany, and Italy, all report higher-than-expected consumer morale as shoppers continue to open their wallets and spend to support expanding a strong overall economy.
European Central Bank President Christine Lagarde has urged the single currency bloc to drive economic growth at home to buttress market challenges from overseas, according to Reuters on Wednesday (Jan. 29).
Germany’s GfK institute researcher Rolf Buerkl said that a partial trade agreement recently reached between the United States and China was good for Europe’s largest economy.
“The positive start of the consumer climate in 2020 confirms our assessment that private consumption will continue to be an important pillar of the German economy this year,” Buerkl said.
France, the eurozone’s second-biggest economy, saw consumer confidence increase unexpectedly in January while weathering potential slowing factors such as major pension reform strikes — the country’s biggest since World War II — that closed down major portions of the French public transit system.
Compare the French shutdown to the economic damage — approximately $11 billion — the United States’ government shutdown caused in early 2019. As a CBO report noted, “as a result of reduced economic activity, the CBO estimates, real (that is, inflation-adjusted) gross domestic product (GDP) in the fourth quarter of 2018 was reduced by $3 billion (in 2019 dollars) in relation to what it would have been otherwise.” It went on to say, “in the first quarter of 2019, the level of real GDP is estimated to be $8 billion lower than it would have been — an effect reflecting both the five-week partial shutdown and the resumption in economic activity once funding resumed.”
In Italy, consumer confidence in January 2020 grew to 111.8 from 110.8 in December of last year.
The latest data comes against a backdrop of continued sluggish growth in the eurozone’s third largest economy.