Eurostat's third (and final) estimate of euro area Q3 GDP has been revised down to +0.1% q/q from +0.2% q/q published in the second estimate. The euro area economy has thus experienced the slowest pace of growth since Q2 09 (when it fell by 0.2% q/q) in Q3 2011, slowing down from +0.2% q/q in Q2 (and +0.8% q/q in Q1).
 
Looking ahead, we expect that the significant deterioration in business surveys will take its toll on real activity data, and particularly on the industrial sector. As a result, we project euro area real GDP to fall by 0.5pp between the last two quarters of the year to -0.4% q/q in Q4. That said, we foresee that Q4 should be the trough in terms of momentum for the euro area as: 1) European political leaders are pushing hard for a solution to the euro area sovereign debt crisis, making notable progress at the last EU summit (although significant details still need to be outlined); and 2) PMI composite indices have stabilised to the upside since October (cyclically troughing at 46.5; at 47.9 in December). That said, there are still indications of a contraction in activity, and thus we still expect that GDP should fall by 0.2% q/q in Q1 12.

source: BarCap