Eurozone Growth Slips to Four-Year Low, Fueling Crisis Fears


Eurozone Growth Slips to Four-Year Low, Fueling Crisis Fears


A sweater factory in Solomeo, Italy. The country’s economic stagnation is likely to heighten the dispute between the populist government in Rome and officials with the European Commission in Brussels.CreditCreditNadia Shira Cohen for The New York Times

FRANKFURT — Economic growth in the eurozone has fallen to its slowest pace in more than four years, and Italy is not growing at all, according to figures released Tuesday. The snapshot is likely to sharpen political divisions in the European Union and make the region more vulnerable to the forces rattling financial markets.

Both numbers were unexpectedly poor. Eurozone growth in the quarter was only half as fast as it had been in the previous three-month period, and the rate of growth has fallen each of the last three quarters.

Italy’s stagnation is likely to heighten the dispute between the populist government in Rome and officials in Brussels. The European Commission has said that Italy’s proposed budget — full of debt-financed welfare programs — flouts spending limits that countries in the European Union are supposed to observe.

she would give up leadership of her conservative party in December and not seek re-election in 2021. The surprise announcement came after elections in the state of Hesse underlined a migration of voters from centrist parties to parties on the far left and far right.

The eurozone growth figure published Tuesday was a first estimate and contained no detail about what sectors led to the slowdown. Still, the causes are obvious enough.

They include the prospect that Britain’s separation from the European Union will be disruptive; a trade war with the United States that has interfered with trans-Atlantic commerce; and rising interest rates as central banks roll back the stimulus programs they used to combat the last financial crisis.

Those risks are accumulating at the same time that financial markets are unusually nervous. Daily fluctuations in the prices of stocks, bonds, currencies and commodities like gold and copper are at their most extreme levels since 2008, when the last global financial crisis began, according to data compiled by analysts at the German bank Berenberg.

The one somewhat bright spot in the numbers Tuesday was France, which registered growth of 0.4 percent from the previous quarter. But, coming after two weaker quarters, even that above-average result was not enough to achieve the 1.7 percent pace of expansion that economist say President Emmanuel Macron needs to validate his program of business-friendly reforms.

The reforms have not yet brought widespread economic gains or job creation, damaging Mr. Macron’s popularity with voters. The government needs the economy to expand by around 1.7 percent in each of the next four years if it is to maintain a pledge to cut unemployment to 7 percent, from more than 9 percent today, by the next presidential election, economists say.

The disappointing growth in the eurozone as a whole was partly caused by factors that aren’t likely to repeat, leaving room for hope that growth will pick up toward the end of the year.

signal another crisis.

Bernd Meyer, chief strategist for wealth and asset management at Berenberg, pointed out that prices for tech stocks or real estate were not at the extreme levels that preceded past meltdowns.

During a meeting with reporters Tuesday, Mr. Meyer argued that market pressure on Italy will eventually force the government to relent on its spending plans. But, he added, “they will only back down when they are staring into the abyss.”

Others are less sanguine about the eurozone’s prospects. Nicola Nobile, lead economist at Oxford Economics, a consulting firm, noted that the European Commission’s survey of economic sentiment also slipped Tuesday, though it remains well above crisis levels.

“Recent surveys,” Mr. Nobile said in a note to clients, “are painting a rather bleak picture of eurozone growth.”

Liz Alderman contributed reporting from Paris.

A version of this article appears in print on , on Page B3 of the New York edition with the headline: Eurozone Growth Slips, Fueling Fears of a Crisis