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Austria lockdown casts shadow over rest of euro-zone

The “full lockdown” in Austria announced earlier today is a response to the rapid deterioration in the Covid situation there and we estimate that it could knock around 1.5% off the country’s GDP in Q4. While on its own this would not make a big difference to euro-zone GDP, there is a clear risk that other larger economies, notably Germany, are forced to follow suit. Our euro-zone Q4 GDP growth forecast may well prove too optimistic and stagnation, or even contraction, are plausible.
Jessica Hinds Europe Economist
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European Data Response

German Ifo Survey (May)

The Ifo survey for May suggests that activity in Germany may be holding up a little better than we had feared. But the headline Business Climate Index is still consistent with GDP contracting in year-on-year terms and the expectations component shows that businesses think the situation will get worse. ECB Drop-In (24th May 10:00 ET/15:00 BST): Could the ECB deliver a hawkish surprise? Join economists from our Europe and Markets teams for a discussion about what to expect from the Bank’s tightening cycle, including the chances for a bumper hike in July or even an early move at next month’s meeting. Register now.

23 May 2022

European Data Response

Euro-zone Consumer Confidence (May)

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20 May 2022

European Economics Weekly

High inflation, record trade deficit

Data released over the past week revealed that the euro-zone recorded its first monthly current account deficit since 2012 and provided further evidence that underlying price pressures are building. We expect the latter to prompt the ECB to raise rates by 25bp, if not 50bp, in July. Next week, the PMIs and Ifo for May will provide more evidence that the euro-zone and German economies are at risk of recession. ECB Drop-In (24th May 10:00 ET/15:00 BST): Could the ECB deliver a hawkish surprise? Join economists from our Europe and Markets teams for a discussion about what to expect from the Bank’s tightening cycle, including the chances for a bumper hike in July or even an early move at next month’s meeting. Register now.  

20 May 2022

More from Jessica Hinds

European Economics Update

Wage indexation won’t drive second round effects

The current bout of high inflation will put much less direct upward pressure on negotiated wages in the euro-zone than in previous such episodes. This is because far fewer agreements now contain inflation-linked clauses and those which do are typically based on a measure that excludes energy.

16 November 2021

European Data Response

Euro-zone GDP & Employment (Q3)

The decent increase in euro-zone GDP in Q3 means that the recovery is now almost complete in most of the region. We had already expected growth to slow markedly in Q4 as the boost from reopening fades and supply chain disruption takes its toll, but the recent rise in Covid cases is an additional downside risk.

16 November 2021

European Economics Update

Spanish inflation surge another headwind to recovery

The jump in headline inflation in Spain in October was almost entirely down to the electricity component. We do not expect this bout of higher inflation to last, but in the meantime, consumers are facing a squeeze on real incomes that risks leaving Spain’s economy even further behind its peers.

12 November 2021
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