(RTTNews) - Supported by exports and household spending, the euro area economy logged a modest expansion in the third quarter, latest data published by Eurostat confirmed Tuesday.
Gross domestic product grew 0.2 percent sequentially, in line with the initial estimate and matched the expansion seen in the second quarter.
On an annual basis, economic growth came in at 1.4 percent compared to 1.7 percent in the previous quarter. The statistical office confirmed the third quarter growth figures published on November 15.
Going forward, the 17-nation economy is widely expected to contract in the fourth quarter, given the heightened debt crisis, spending cuts amid elevated unemployment rate and inflation squeezing purchasing power.
The breakdown of GDP showed that household spending climbed 0.3 percent quarter-on-quarter, after falling 0.5 percent a quarter ago. Meanwhile, government spending remained flat compared to a 0.1 percent drop in the previous quarter.
Investment edged up 0.1 percent versus stagnation in the second quarter. Exports and imports moved up 1.5 percent and 1.1 percent, respectively.
The EU27 economy grew 0.3 percent, slightly faster than the 0.2 percent rise in the second quarter. Meanwhile, annual growth eased to 1.4 percent from 1.7 percent.
The recent Purchasing Managers' survey showed the Eurozone private sector contracting for a third month in November, with the latest fall reflecting declines across all the big-four nations.
IHS Global Insight's European Economist Howard Archer said the strong likelihood of clear Eurozone contraction in the fourth quarter and darkened outlook fully warrant lower interest rates.
Last week, European Central Bank President Mario Draghi expressed willingness to step in with new actions to combat growing downside risks to economy. Economists now expect the ECB to slash its key rate by another quarter point this Thursday.
Adding to concerns, rating agency Standard & Poor's on Monday placed the sovereign ratings of 15 Eurozone nations on CreditWatch with negative implications, citing heightened systemic stresses in the region. The agency expects to conclude its review as soon as possible following the EU summit scheduled for December 8 and 9.
S&P said last week that it expects Eurozone to go through a mild recession during the first half of 2012, before a modest pickup in the latter half. The Paris-based Organization for Economic Cooperation and Development also signaled that the bloc is entering a mild recession.
The OECD projects growth to slow down sharply to 0.2 percent next year from 1.6 percent this year.
