Eurozone growth slows as Italy woes weigh

BRUSSELS, Oct 30 (AFP): Growth in the eurozone slowed significantly in the third quarter, official data showed on Tuesday, as Italy's economic troubles weighed and car production in Germany was disrupted.
Gross domestic product in the 19-country single currency area rose just 0.2 per cent from July to September, the Eurostat agency said, compared with 0.4 per cent in the preceding quarter and analyst forecasts, also for 0.4 per cent.
The disappointing data come with Brussels locked in a standoff with Rome over its populist government's plans for larger deficits despite the high public debt load.
Italy, the eurozone's third largest economy, in August slashed growth forecasts for the year from 1.5 per cent to just 1.2 per cent and earlier this month Moody's ratings agency cut the country's credit rating to a notch above junk status.
On a year-to-year basis, economic growth in the eurozone reached 1.7 per cent, well below the 2.2 per cent rate seen in the previous quarter. Bert Colijn, Senior Economist at ING bank said the 0.4 per cent growth seen in the second quarter "may have felt like a disappointment at the time, but could well have been a last hurrah of the growth cycle".
Hold-ups in car production in Germany related to testing for new emissions rules likely dragged on growth in the 19-country eurozone's economic powerhouse, but Colijn said developments in Italy were a greater concern.
"Perhaps more worrying was the stagnation of growth in Italy, which was the first time in four years that the economy did not post growth over a quarter," Colijn said.
"With budget discussions already tense between Rome and Brussels, this stagnation will only add to concerns."
But Jessica Hinds of Capital Economics gave a more upbeat assessment, suggesting the slow growth was due to "temporary factors" and "some recovery in the coming quarters" could be expected.