Data released this week confirmed that the euro-zone economy finished 2017 on a strong footing. But the composition of growth shifted markedly in the second half of last year, with net trade making a large positive contribution to GDP while domestic demand growth slowed sharply. As the boost from trade is set to fade, overall growth will slow if consumer spending and investment growth fail to pick back up.
Encouragingly, temporary factors appear to be behind much of the slowdown in consumer spending growth in Q4. Indeed, unseasonably warm weather throughout much of the region weighed on energy consumption and clothing sales. And with business confidence strong and housing markets recovering, it seems likely that investment growth will gather pace in the coming quarters.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services