Eurozone growth and inflation surge, adding to pressure on ECB

2 min

Brussels (AFP)

Growth in the eurozone accelerated, inflation rose towards the ECB's key target and unemployment dipped to a seven-year low as the bloc's economy shrugged off uncertainty over Brexit and US President Donald Trump.

The EU's Eurostat statistics agency said growth in the eurozone sped up in the fourth quarter of 2016 to 0.5 percent, above the 0.4 percent forecast by analysts surveyed by Factset, a data company.

The EU's Economic Affairs Commissioner Pierre Moscovici cautioned that the solid growth data still fell short of a full recovery.

"The recovery is solid for the fifth year running... but it is still too weak to create all the jobs we need," Moscovici said.

Inflation in the eurozone meanwhile jumped to 1.8 percent in January, a big leap from 1.1 percent a month earlier.

That will put pressure on the European Central Bank to scale back its controversial stimulus measures as it nears its stated target figure of below but close to 2.0 percent.

Eurostat also said that the eurozone jobless rate fell to its lowest level since May 2009 in December.

Unemployment in the 19-nation eurozone fell to a lower-than-expected 9.6 percent in the last month of 2016, with big drops in Spain and Portugal.

Eurostat also revised the November rate down to 9.7 percent from the 9.8 percent first given last month.

During the worst of the debt crisis, unemployment in the single currency bloc peaked at 12.1 percent.

The fall in unemployment will also add to a growing list of arguments out of powerful Germany that the European Central Bank should put a stop to a massive stimulus programme as early as possible.

The ECB, led by its chief Mario Draghi, is at pains to stress that despite the series of positive economic signals, it may be too soon to pull back on the programme.

Germany, the EU's biggest economy, has long grumbled about Draghi's policy, objecting that the stimulus, along with low interest rates, hurt savers.