The euro zone economy expanded by a feeble 0.3% in the last three months of 2010, official figures showed today amid persistent fears that the debt crisis could sink more frail nations.
As European finance ministers met to discuss ways to shield the euro from future crises, Eurostat data confirmed the euro zone returned to growth in 2010, expanding 1.7% after a record 4.1% contraction in 2009.
But the single currency area sputtered in the last quarter of the year, coming in slower than the 0.4% predicted by economists as winter storms hit activity and austerity measures spread across Europe. This followed an equally weak 0.3% expansion in the third quarter after stronger growth of 1% growth in the second.
Euro zone finance ministers decided yesterday to set the effective lending capacity of a future bailout mechanism at €500 billion, doubling the firepower of a temporary fund that it will replace in 2013.
The EU bailed out Greece last year and set up the crisis fund that was tapped by Ireland at the end of last year. Analysts warn that Portugal and even the bigger Spanish economy could need rescues from market pressures.
The Eurostat figures put a spotlight on the two-speed recovery in the euro zone, which expanded to 17 members in January when Estonia adopted the euro. While powerhouses Germany and France recorded growth of 0.4% and 0.3% in the fourth quarter, Spain expanded by 0.2%, Portugal shrank 0.3% and Greece was stuck in recession at negative 1.4%.
Portuguese Finance Minister Fernando Teixeira dos Santos, whose country's borrowing costs are on the rise, lamented that Europe was moving too slowly to put in place new defences to protect the euro from more market upheaval.
'A country on its own cannot face up to the challenges posed by this crisis. We have to do our bit but we also need European efforts to stabilise the euro,' he said before a second day of meetings with EU counterparts in Brussels today.
Euro zone leaders will hold a summit on March 11 before another meeting of heads of state and government from the entire, 27-nation EU on March 24-25 to agree on the permanent crisis fund and ways to coordinate economic policies.
Euro zone trade surplus falls sharply in 2010
The euro zone recorded a trade surplus of €700m in 2010, down sharply from €16.6 billion in 2009, official figures showed today.
Exports grew by 20% across the single currency area while imports increased by 22%, according to the Eurostat data agency.
The euro zone's trade balance with the rest of the world was in the red in the month of December, posting a deficit of €500m after a surplus of €3.2 billion in December 2009.
The euro zone had 16 member states last year. Estonia became the 17th nation to adopt the euro in January.
The wider, 27-nation European Union, which includes Britain and Poland, posted a foreign trade deficit of €143.3 billion in 2010 compared to a deficit of €108.1 billion in 2009.
The Eurostat figures also show that Ireland recorded the second highest trade surplus in the EU after Germany for the first 11 months of last year. During that period, Irish exports rose by 5% to € 81.2 billion while imports dropped by 1% to €40.9 billion, giving a trade surplus of €40.3 billion.
But Ireland had the lowest export growth of 5% in that period. Ireland and Greece were the only countries in which imports fell in the period.
