The flash data were unexpectedly revised a little weaker in the final look at fourth quarter GDP. Quarterly growth was trimmed a tick to 0.0 percent, in turn reducing the annual change to 1.8 percent, down from the third quarter's upwardly revised 2.4 percent. Total output was also just 2.4 percent above its pre-Covid level at the end of 2019.

The GDP expenditure components showed household spending falling 0.9 percent on the quarter and gross fixed capital formation declining fully 3.6 percent. However, government consumption rose 0.7 percent and business inventories added 0.1 percentage point. Net foreign trade also boosted growth by a hefty 0.9 percentage points as exports held steady while imports declined 1.9 percent.

Regionally, there were contractions in Germany (0.4 percent) and Italy (0.1 percent) and limited gains in France (0.1 percent) and Spain (0.2 percent). Elsewhere, Greece (1.4 percent) had a very good quarter but there was a sizeable fall in Estonia while Finland (minus 0.6 percent after minus 0.1 percent) slipped into recession.

Today's update contains no major surprises and will be of little importance to ECB policy. The first quarter looks likely to be a little stronger and anyway, it is overshooting inflation that blinks by far the most brightly on the central bank's radar. At now minus 21 and minus 40 respectively, the region's ECDI and ECDI-P continue to signal that overall Eurozone economic activity is falling short of market expectations.

No revisions are expected to the flash estimate leaving quarterly growth of 0.1 percent and an annual increase of 1.9 percent.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy and is usually released early in the third month after the reference period. Following two provisional (flash) estimates containing only limited information, this report provides the first full look at the national accounts for the region.

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 a treasure-trove of 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, and price (inflation) indexes 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 anemic 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 typically lead to increased demand for a local currency. However, inflationary pressures can put downside pressure on a currency regardless of growth. For example, if inflation remains above the ECB’s near-2 percent target for long enough, worries about the impact of lost competitiveness on the merchandise trade balance could prompt investors to switch to an alternative currency.