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Recent Norwegian economic data suggest that a September rate cut is less likely than we had previously thought. But we still think the Norges Bank will cut its key policy rate, currently at 1.5%, by the end of the year with a further cut following early …
19th August 2014
The key remaining barrier to bolder ECB policy support seems to be the Governing Council’s viewthat long-term inflation expectations are “well-anchored”. We have doubts over the usefulness ofsuch measures and expect the Bank to implement quantitative …
18th August 2014
June’s euro-zone trade data provided yet further evidence that the external sectorremains too weak to make up for the region’s feeble domestic recovery. … Euro-zone Trade …
The euro-zone’s economic recovery came to a complete halt in the second quarter at what shouldhave been a very early stage. There were some temporary factors at play which suggest thatgrowth should resume in Q3 and beyond. But the recovery will be very …
The decline in German GDP in Q2 is not as alarming as it might appear given that it was causedpartly by temporary factors. But while the economy should return to growth in Q3 and beyond, itseems clear that the recovery has already passed its peak and …
14th August 2014
The stagnation of the euro-zone economy in the second quarter further underlinedthe need for the European Central Bank (ECB) to take bolder policy action to addressthe continued weakness of the economy and the associated risks of deflation. … Euro-zone …
June’s euro-zone industrial production data confirmed that industry’s recovery has faltered and suggested that the sector may have dragged on GDP growth in Q2. … Euro-zone Industrial Production …
13th August 2014
Greece’s Q2 GDP release suggests that the economy is slowly emerging from the abyss. But growth remains too weak for the country to reduce its huge public debt without significantly more outside help. … Greek GDP …
August’s drop in the ZEW Economic Sentiment Indicator was another worrying signfor the German economy, particularly as perceptions of current conditions are nowweakening along with expectations. … German ZEW Survey …
12th August 2014
While last week’s ECB Governing Council meeting offered few signs of imminent further policymeasures, one encouraging development was President Draghi’s willingness to talk down theeuro. But we think his words will need to be followed by actions before …
11th August 2014
Despite an improvement in June, French industrial data suggest that industry probablydragged on overall euro-zone growth in Q2. Meanwhile, Germany’s latest trade dataindicate that the external sector there remains subdued. … French Industrial Production & …
8th August 2014
The ECB gave no strong hints of imminent policy action this month as it waited to judge the effects ofpreviously announced measures and claimed that long-term inflation expectations were wellanchored.But President Draghi did sound rather more downbeat …
7th August 2014
June’s small rise in German industrial production was a huge disappointment, andsuggests that activity in what has been the euro-zone’s strongest economy stagnatedin Q2. This will add to pressure on the ECB to offer more policy support. … German & Spanish …
According to recent hard data, next week’s Q2 GDP release may show that the euro-zone’srecovery gained no momentum after Q1’s disappointing 0.2% quarterly rise in GDP. In fact,the performance of industry and exports may even have weakened. The improvement …
6th August 2014
The second consecutive fall in GDP underlines that Italy’s crisis is not over yet. Withpublic debt still rising, market pressures on the country may yet start to build. … Italian GDP (Q2, …
June’s rise in euro-zone retail sales points to a further modest increase inconsumer spending in the second quarter. But more timely indicators, such astoday’s final PMI figures, suggest that the broader recovery has failed to gatherpace since then. … …
5th August 2014
The ECB’s latest Bank Lending Survey (BLS) added to the evidence that improving conditions in the euro-zone’s financial sector are finally feeding into the real economy. But it will be a while before credit conditions are no longer a weight on the …
4th August 2014
Although progress remains slow in many countries, the latest euro-zone fiscal data provided moreevidence that peripheral governments are gradually strengthening their fiscal positions. … Euro-zone Fiscal Monitor …
1st August 2014
With the measures announced in June seeming tohave some positive effects on financial marketconditions, the ECB is unlikely to announceadditional policy support this month. But furthersigns of economic weakness and the persistentlylow rate of inflation …
31st July 2014
July’s flash euro-zone consumer prices data underlined the continued weaknessof price pressures in the currency union and supported our view that the ECB hasmore work to do to tackle the risk of deflation. … Euro-zone Flash CPI (Jul.) & Unemployment …
Q2’s GDP figures showed a sharp slowdown in the pace of Belgian growth andsuggested that the recovery peaked at the start of this year. … Belgian GDP (Q2, …
30th July 2014
Finland’s close economic ties with neighbouring Russia mean that the EU’s stiffer sanctions on Russia announced yesterday are likely to deal another blow to the Finnish economy. Even if the direct impact is set to be small, a weaker Russian economy bodes …
The euro finally appears to be succumbing to the downward pressure implied by the divergentprospects for monetary policy in the US and euro-zone. But bigger declines are likely to be needed tokick-start the region’s recovery and fully eliminate the danger …
July’s tiny rise in the EC’s Economic Sentiment Indicator (ESI) suggests that the eurozonerecovery is unlikely to strengthen much in Q3. … Euro-zone EC Survey & ECB Bank Lending Survey …
The provisional estimate of Swedish Q2 GDP revealed a disappointingly weak pace of growth. But domestic demand remains reassuringly strong, suggesting that the economic recovery will remain on track. … Swedish GDP (Q2, …
The provisional estimate of Swedish Q2 GDP revealed a disappointingly weak pace of growth. But domestic demand remains reassuringly strong, suggesting that the economic recovery will remain on track. … Swedish GDP (Q2 14, …
The likelihood that the EU will impose stiffer sanctions on Russia has raised concerns about the effecton German exports and the wider economy. But while certain companies rely strongly on trade withRussia, the economy as a whole does not and the German …
28th July 2014
Despite a slight fall in July, euro-zone consumer confidence remains at a high level. But this hasyet to be reflected in a significant rise in spending growth. This might be because consumers’optimism relates more to the wider economic outlook than to …
On the face of it, the UK’s impressive economic recovery offers significant hope to the euro-zone. Butwe think that still high levels of debt and a relatively timid monetary policy response will prevent theregion following in the UK’s footsteps for the …
25th July 2014
Although June’s euro-zone monetary data showed some further signs of improvement, lending is still falling and the data point to a significant risk of deflation in the region. … Euro-zone Monetary Indicators Monitor …
July’s drop in the German Ifo Business Climate Indicator (BCI) is another worryingsign that the recovery may have passed its peak. … German Ifo Survey (Jul.) & Consumer Confidence …
The sharp fall in wages and recent flurry of structural reforms in Greece has not yet fed intocompetitiveness gains. Greece is still not able to run the sustained external surpluses that it needs. … How competitive is Greece …
24th July 2014
News that the three major Flemish parties have formed a regional government raises hopes that Belgium’s federal political deadlock will be resolved soon. But the proposed national coalition looks set to avoid the contentious reforms needed to reverse …
The jump in the flash composite PMI in July suggested that euro-zone activity picked up at the start of Q3 but it is unlikely to alleviate concerns that the recovery in the euro-zone is already running out of steam. … Euro-zone Flash PMIs …
The Banco De Espana’s estimate that Spanish GDP rose by 0.5% in Q2 suggests thatSpain may have been one of the strongest euro-zone economies last quarter. But wedoubt that Spain’s recovery can strengthen much further. … Spanish GDP (Q2 …
23rd July 2014
German house price inflation is modest by international standards, housing remains affordable andmortgage debt is low. Accordingly, fears of overheating seem overdone and should not ultimatelyprevent the ECB from providing extra monetary policy support to …
21st July 2014
ECB President Mario Draghi’s statement last week that “QE falls squarely in our mandate” was perhaps the strongest signal yet that the ECB is considering bolder policy support. But Bundesbank President Jens Weidmann voiced his discomfort with even the …
Construction is set to remain one of the worst performing parts of the French economy. The sector’sproblems are symptomatic of the challenges facing the broader economy. … Subsidence in the French construction …
18th July 2014
The recent underperformance of the French economy compared to Germany reflects fundamentalfactors that will drive an even greater wedge between the two economies over time. Thisdivergence will complicate both monetary and fiscal policy-making in the …
17th July 2014
May’s euro-zone trade data provided some tentative signs that exports may bebeginning to pick up. But the external sector remains too weak to offset fears that thedomestic recovery is faltering at an early stage. … Euro-zone Trade …
16th July 2014
Slovenia’s recent election looks set to produce a government that will dilute the country’s muchneededprivatisation programme. Nonetheless, on balance, the new administration will probably helpconsolidate Slovenia’s fragile economic recovery. … New …
15th July 2014
July’s fall in German ZEW investor sentiment added to signs of a slowdown in theeuro-zone’s largest and strongest economy. … German ZEW Survey …
The sharp fall in euro-zone industrial production in May suggests that the recovery in the sector is flagging before it has even really begun, boding ill for the region’s overall economic recovery. … Euro-zone Industrial Production …
14th July 2014
Data published last week revealed that production fell in all four of the euro-zone’s largest economies in May. But the downturn in Germany has been most disappointing given hopes that this industrial powerhouse might drive an economic revival in the …
The recent rise in Portuguese government bond yields related to fears for its banking sector confirms that policymakers have done little to weaken the “doom loop” between banks and sovereigns in the euro-zone’s periphery and highlights the fragility of …
10th July 2014
The sharp falls in Italian and French industrial production in May were another sign that the sector’s recovery is already flagging before it has even really begun. … French & Italian Industrial Production …
The ECB’s prospective ABS purchases might ultimately help to strengthen the euro-zone financial system. But they will not stave off the immediate disinflationary pressures facing the region. … ABS purchases will not take QE off the …
9th July 2014
The Swedish Riksbank’s interest rate cut last week will put pressure on the Norges Bank to follow suit. We expect the Bank to cut its policy rate by the end of the year. And as spending in the energy and household sectors struggles to pick up, the Bank …
8th July 2014
While the European economic recovery probably picked up a bit of speed in the second quarter of the year, there are growing signs that Q2 was as good as it is likely to get. Activity indicators in the euro-zone have softened again in the last few months, …
