Euro-Zone Growth Weaker Than Expected

A crane operates behind a row of discarded refrigerators in Duisburg, Germany. German growth slowed to 0.4% in the fourth quarter from 0.7% in the third.

By NICHOLAS WINNING for the WSJ

LONDON—Euro-zone growth was slightly weaker than expected in the final quarter of 2010 as Germany was hit by severe winter weather, France's economy failed to accelerate, and Greece and Portugal contracted, preliminary official data showed Tuesday.

Euro-zone gross domestic product grew 0.3% for the second consecutive quarter in the period from October to the end of December, the European Union's Eurostat agency said. Economists were expecting quarterly growth of 0.4%, according to a Dow Jones Newswires' survey last week.

On a year-to-year basis, GDP was 2% higher than in the fourth quarter of 2009—up from growth of 1.9% in the third quarter but short of market expectations of a 2.1% expansion. For the year as a whole, the euro-zone economy grew 1.7% in 2010, following a record 4.1% contraction seen the previous year when the single currency area was in the grip of a severe recession due to the credit crisis and drop in global trade.

In the currency area's largest economies, German growth slowed to 0.4% in the fourth quarter from 0.7% in the third, France expanded 0.3% for a second consecutive month, while Italian GDP rose just 0.1%.

Among the smaller states at the center of the euro zone's debt crisis, many of which have introduced severe austerity measures, Greece contracted 1.4% on the quarter, Portugal shrunk 0.3% and Spain grew just 0.2%.

In a separate release, Eurostat said the 16 countries that shared the euro at the time had a combined global goods trade deficit of €500,000 million ($677,350) in December following a revised €1.5 billion deficit in November. Economists were, on average, predicting a €1.2 billion surplus.

The breakdown of the data showed euro-zone goods exports totaled €133.6 billion in December, a 20% increase annually, but imports grew 24% to €134.2 billion. However, exports were 5% lower on a monthly basis in December, while imports fell 5.6%. For the year as a whole, the euro zone's trade surplus shrank to €700,000 million in 2010 from €16.6 billion in 2009 as the rise in imports outpaced that of exports.