The euro zone economy ended 2014 with its worst quarter for over a year, increasing pressure on the ECB to act. Ciara Lee reports.
Failing to shrug off the winter chill, European shares resumed their sell-off. Worries over political uncertainty in Greece contributed to a fall in key indices and energy stocks declined as the oil price hit new lows. With the euro hovering around a nine-year low, many fear European markets may not recover until after the Greek election later this month. The euro zone economy isn't helping - it ended 2014 with its worst quarter for over a year. Further price cutting failed to drive up business activity, with GDP growth of just 0.1 percent Germany could only manage a stuttering performance. And France is causing real concern, says CIBC's Jeremy Stretch. (SOUNDBITE) JEREMY STRETCH, HEAD OF FOREX STRATEGY AT CIBC, SAYING: "If we are going to see further weakness in the French economy, then I think that will really enlarge the degrees of concern within the euro zone, very much at its heart. And I think that is very much going to be the primary concern. However, having said that, I think the outlook for Germany is not quite as doom-laden as some of the assumptions might have suggested in the back end of Q4." It all puts further pressure on the European Central Bank to act. (SOUNDBITE) (English) JEREMY STRETCH, HEAD OF FOREX STRATEGY AT CIBC, SAYING: "Clearly markets have ramped up expectations of what Mr Draghi will do at the January 22nd meeting, and one suspects that those expectations will be hardened up if we see a substantial move into a deflationary environment in the December HICP numbers." Consumer price data for the euro zone is also expected to show a fall this week. But many economists believe even if the ECB starts full- blown bond-buying it may not revive the euro zone. Jane Foley is from Rabobank. (SOUNDBITE) (English) HEAD OF FOREX STRATEGY AT RABOBANK, JANE FOLEY, SAYING: "Bond yields across the board are now extremely low, and growth is also extremely low. So you've got to argue that a marginal decrease in interest rates from their already low levels is unlikely to bring a boom to either growth or inflation. That said I think one of the bi-products of Draghi's dovish talk over the last few months has been pressure on the euro." Even with action from the ECB, inflation and growth could remain painfully low, sparking fears of another financial crisis for the currency bloc.