The preliminary flash data for the fourth quarter were a little stronger than expected. A 0.1 percent quarterly increase was a tick above the market consensus but still short of the previous period's unrevised 0.3 percent gain and the weakest performance by GDP since the first quarter of 2021. Annual growth slowed from 2.3 percent to 1.9 percent, also its worst print since the start of 2021.

No GDP expenditure components are available in today's estimate but the national data already released suggest that weak consumer spending was a major factor capping the expansion. To this end, GDP actually contracted in both Germany (0.2 percent) and Italy (0.1 percent) while both France (0.1 percent) and Spain (0.2 percent) managed just meagre advances. Elsewhere, Ireland (3.5 percent) had a good quarter but there were sizeable falls in Lithuania (1.7 percent) and Austria (0.7 percent), However, at this stage no member state is shown to be in recession.

Subject to any revisions and as soft as they are, today's data reduce the risk of the Eurozone as a whole sliding into recession in 2023. However, that does not rule out what is likely to be a very difficult first quarter for GDP. That said, at 33 and 38 respectively, the region's ECDI and ECDI-P continue to signal that overall economic activity is running well ahead of market expectations.

Fourth-quarter Eurozone GDP is expected to come in unchanged on a quarterly basis versus 0.3 percent growth in the third quarter. The year-over-year rate in the fourth quarter is seen at plus 1.7 percent versus 2.3 percent growth previously.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. There are two preliminary estimates which are based on only partial data. The first is the preliminary flash, introduced in April 2016 and limited to just quarterly and annual growth statistics for the region as a whole. This is issued close to the end of the month immediately after the reference period. The second flash report, released about two weeks later, expands on the first to include growth figures for most member states but still provides no information on the GDP expenditure components.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anaemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.