In 2016, weak inflation resulted in strong real disposable income growth for consumers, which in turn helped to support better-than-expected real GDP growth. The decent pace of growth, combined with worries about the strength of growth and political developments in other countries, meant that the euro-zone stayed largely out of the spotlight this year.
But with a number of political events taking place in 2017, attention will return to the euro-zone once more. Political uncertainty is likely to result in consumers and firms holding back their spending, and the previous tailwind of falling energy prices is now fading. Accordingly, economic growth is set to slow and market disruption could return.
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