Q4 outlook darkens as tighter restrictions loom

Germany’s worsening Covid situation means much of the country could be subject to much tighter restrictions soon, potentially knocking around 0.25%-pts off euro-zone Q4 GDP. Even if other countries impose less draconian rules, consumer caution might mean the euro-zone as a whole stagnates in Q4.
Jessica Hinds Europe Economist
Continue reading

More from Europe

European Economics Weekly

Euro-zone GDP barely grew in Q4, inflation risks rise

Data released this week suggest that our assumption that euro-zone GDP rose by 0.2% in Q4 could be too optimistic, but we still think that the economy will grow in Q1. Meanwhile, rapid house price inflation adds to the case for the ECB to, in Jay Powell’s words, start thinking about thinking about raising interest rates.

14 January 2022

European Data Response

German GDP (2021)

Provisional data showing that Germany’s GDP increased by 2.7% last year and news that it shrank in Q4 underlines that its recovery has lagged many of its peers, including the US, France and the UK. We think that German GDP will expand by less than the consensus expects this year too.

14 January 2022

European Economics Update

ECB likely to raise rates to zero in 2023

With pandemic-related inflationary pressures proving a bit more intense and persistent than we had anticipated, and policymakers sounding more willing to tighten policy, we think the ECB is most likely to end net asset purchases in December 2022 and raise its deposit rate to zero by end-2023. Drop-In: Neil Shearing will host an online panel of our senior economists to answer your questions and update on macro and markets this Thursday, 13th January (11:00 ET/16:00 GMT). Register for the latest on everything from Omicron to the Fed to our key calls for 2022. Registration here.

12 January 2022

More from Jessica Hinds

European Data Response

Euro-zone Flash PMIs (Nov.)

The unexpected rise in the euro-zone Composite PMI in November suggests that the region’s recovery has not lost further momentum. But with supply shortages still acute, Covid restrictions being tightened and price pressures intensifying, renewed falls in the index seem likely.

23 November 2021

European Economics Weekly

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.

19 November 2021

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
↑ Back to top