Thursday’s GDP figure masked a distinctly two-speed reality: GDP contracted in both France and Germany in the fourth quarter, by 0.1 percent and 0.2 percent respectively. The two together account for roughly half of eurozone GDP. France has lacked a stable government since elections in the middle of last year, while Germany faces early elections in February after its three-party governing coalition collapsed.

Spain, ruled by a fragile minority government, saw its economy expand by an impressive 0.8 percent — beating analyst forecasts by 0.2 percentage points. In total, its economy grew 3.5 percent year-on-year, making it the fastest growing economy in the currency area. HSBC analyst Fabio Balboni pointed out that Spain was responsible for two-fifths of all eurozone growth in the quarter.Portugal, Lithuania and Hungary also grew healthily.

Core takes precedence

“The fact that the ECB has cut by a quarter point means that the German economy needs a stronger boost and that growth in Germany and France is taking priority over the fight against inflation,” said Javier Díaz-Giménez, an economics professor at IESE Business School in Barcelona.

The divergence marks something of a reversal of post-Great Financial Crisis trend, where the eurozone core was more resilient to the shock, while smaller peripheral countries were trapped in rolling debt crises and austerity.

The figures also puts more pressure on Commission President Ursula von der Leyen, who Wednesday unveiled a policy package aimed at slashing red tape and accelerating growth across the European Union.

Riccardo Marcelli Fabiani of Oxford Economics said in a note that, despite the poor quarter, he believed that the recovery will continue at a moderate pace, sustained by rising incomes as well as more spending from households. However, he said, “manufacturing is not out of the woods yet and investment is unlikely to suddenly bounce back.”