Filtered by Subscriptions: Europe Economics Use setting Europe Economics
Ireland’s Q4 GDP data, released today, show that the economy slowed towards the end of last year. But timelier indicators suggest that, despite rising uncertainty about Brexit and the wider euro-zone slowdown, Ireland’s economy is still performing pretty …
14th March 2019
The ECB’s new “TLTRO-III” programme should help to prevent credit conditions from tightening next year. But any boost to lending growth is likely to be small. … TLTRO-III to support bank funding, but not …
13th March 2019
The Greek economy looks set to expand at a modest pace this year. But next year, it will probably slow as investment continues to contract and the slowdown in the rest of the euro-zone weighs on exports. … Greek recovery likely to lose …
The 1.4% increase in industrial production in January was a bit of a relief after the 0.9% fall in December, but it does not put an end to concerns about the euro-zone’s slowdown. The increase did not reverse the declines in the previous two months, and …
We now think that a combination of sluggish economic growth, low inflation, and monetary policy loosening in the US is likely to prompt the ECB to re-launch its net asset purchases next year. … ECB likely to be forced into more QE in …
12th March 2019
The fall in Swedish inflation in February lends further support to our view that the Riksbank will keep interest rates on hold at least into 2021. In fact, with core price pressures subdued, and a rising chance of additional stimulus from the ECB, the …
Economic activity in the euro-zone seems to have remained sluggish in the first quarter of this year: we think GDP growth will be only 0.2% for a third successive quarter. This is largely due to weakness in the industrial sector, driven by softening …
11th March 2019
The stronger-than-expected rise in core Norwegian inflation in February makes it all but certain that the Norges Bank will increase interest rates at its policy meeting later this month. However, given our forecast for oil prices to fall this year, we …
January’s decline in industrial production adds to the evidence that the economy made a weak start to 2019. And timelier indicators suggest that output is unlikely to increase strongly in the coming months. … German Industrial Production …
The ECB’s decision to launch more TLTROs and strengthen its interest rate guidance means that it is, at least for now, ahead of the curve. But we think the Bank is still too optimistic about economic prospects for the euro-zone next year. Policymakers may …
8th March 2019
The more dovish stance adopted by the ECB at its monetary policy meeting this week suggests that the upside risks to Nordic and Swiss currencies – particularly the franc – will intensify. Indeed, if Thursday’s announcement turns out to mark the start of …
The more dovish than expected stance adopted by the ECB at today’s monetary policy meeting supports our view that the SNB will also keep rates lower for longer. And if the euro-zone economy disappoints as we expect, the SNB may find itself having to get …
7th March 2019
The ECB did more than expected today, announcing another round of TLTROs and pledging to leave policy rates on hold at least until next year. But with economic growth and inflation likely to remain lower than even its new forecasts there is a growing …
The third estimate of euro-zone GDP in Q4 last year confirmed that the economy grew at only a moderate pace, and with the latest data fairly weak the ECB is certain to announce lower forecasts later today. But we think that they will remain too optimistic …
Italy’s economy is unlikely to come out of recession in the first half of this year. Several temporary factors might lead to a small expansion in the second half of the year, but even if this happens we still think that the economy is likely to contract …
5th March 2019
The upward revision to February’s final PMIs does not change our view that GDP growth in the euro-zone was probably just 0.2% again in the first quarter of this year. Meanwhile, the increase in retail sales in January was simply a reversal of a …
The continued lack of price pressures in Switzerland will reaffirm the SNB’s dovish stance. Meanwhile, private sector activity data from Sweden for January suggest that the economy made a weak start to 2019. … Swiss CPI (Feb.19) & Sweden Priv. Sec. Prod. …
Philip Lane, who is due to take over as the ECB’s Chief Economist in May, acknowledged last week that Q1 2019 will probably be the third successive quarter of below-potential GDP growth. We agree with that, but we are not convinced by his claim that …
4th March 2019
Q4 GDP data from Switzerland and the Nordics released this week mostly showed impressive rates of growth – particularly in Sweden. However, upon closer inspection, the data masked signs of domestic weakness. … Impressive GDP figures mask domestic …
1st March 2019
The survey evidence continues to suggest that the euro-zone economy is growing, but that it is doing so only slowly, with the services sector doing all of the heavy lifting. The industrial sector appears to be in recession, with little prospect of a …
The increase in the euro-zone’s headline inflation rate, to 1.5% in February, will be of little comfort to the ECB given that it masks a small reduction in the core rate to just 1.0%. Moreover, the latest business surveys confirm that the industrial …
The slight pick-up in the Swiss and Swedish manufacturing PMIs in February provides some comfort that the recent downward pressure on their industrial sectors has not intensified. However, weakness in euro-zone industry is likely to continue to cast a …
The ECB is likely to reduce its forecasts for economic growth at its meeting next week and to again stress that it has the necessary tools to respond if the recent slowdown worsens. But we think it will stop short of making any changes to its forward …
28th February 2019
Q4 GDP data released this morning show that large parts of the region ended 2018 on a high note. However, more timely indicators suggest that activity has lost momentum into 2019. Against a backdrop of a slowing European economy, we also expect Nordic and …
February’s euro-zone Economic Sentiment Indicator (ESI) confirmed the message from other surveys that despite weakness in the industrial sector, the overall economy is still growing. That said, the risks are skewed to the downside, with slower global …
27th February 2019
The slowdown in euro-zone GDP growth in the second half of last year resulted from weaker exports and domestic demand, about half of which was due to problems in the car industry. But more recently, the economy has been hit by an abrupt downturn in global …
26th February 2019
We have removed the single 25bp interest rate hike that we had pencilled in for Sweden this year, and forecast rates to remain unchanged at their current level into 2021. In fact, with risks to activity skewed to the downside, it is even plausible that …
We have just returned from a day of meetings with clients and local contacts in Rome. In this Update , we summarise the key takeaways from the visit. While the banks are heading in the right direction, the consensus view on economic growth is too bullish. …
25th February 2019
The small rise in the composite PMI for the euro-zone, from 51.0 in January to 51.4 in February, came as a bit of a relief – especially as this was the first increase in six months. However, it leaves the index consistent with quarterly GDP growth of …
22nd February 2019
The improvement in annual Swiss industrial production growth in Q4 suggests that the wider economy returned to positive quarterly growth at the end of last year. Nonetheless, while the data appear solid enough, they only add to the evidence that activity …
February’s fall in the Ifo Business Climate Index confirms that Germany’s manufacturing recession has continued this year. But GDP data released earlier today and the Markit services PMI published yesterday, suggest that stronger domestic demand should …
The latest data paint a mixed picture of the performance of the Swiss and Nordic economies at the end of 2018, with signs of weakness in Switzerland and Sweden offset in part by robust quarterly GDP growth in Norway and Denmark. However, we think that GDP …
21st February 2019
February’s Composite PMI provides some reassurance that the euro-zone economy as a whole is still growing. But industrial output is falling, and with the global economy slowing and trade tensions unlikely to disappear, the chance of a strong rebound in …
The weaker-than-expected outturn for Swedish inflation in January underlines our view that the Riksbank will be in no rush to raise interest rates again. Indeed, with core inflation remaining stubbornly subdued, and increasing downside risks to economic …
19th February 2019
The Riksbank delivered a slightly more hawkish message than anticipated at its meeting this week, but we still think that the chance of an interest rate hike this year is falling. Meanwhile, despite Denmark and Finland both performing very well in Q4, we …
15th February 2019
With Germany having narrowly avoided recession and Italy’s downturn dragging on, policymakers at the ECB will soon have to provide more clarity about which tools they are willing to use if the economic data don’t improve. … China and Germany, another …
Recent movements in most of the indicators which signalled the only two recessions in the euro-zone’s history suggest that the economic outlook has deteriorated sharply. They do not yet point unequivocally to a recession, but they do suggest that the risk …
14th February 2019
With Germany avoiding recession only by the skin of its teeth, and Italy actually in recession, the euro-zone eked out GDP growth of only 0.2% in Q4. For now we still expect growth to recover a bit, but the speed with which activity has slowed has …
December’s 0.9% fall in industrial production confirms that there was a broad-based slowdown in the euro-zone at the end of last year, which was not due to problems in just one or two sectors or countries. The downturn will serve to keep worries about a …
13th February 2019
The Riksbank seems to be in denial about the weakening of Sweden’s economy. While it reiterated today that it expects to raise interest rates in the second half of this year, with the economy performing poorly and core inflation showing little sign of …
The next euro-zone recession is likely to begin before the ECB has raised interest rates from the “zero lower bound”. When it happens, we think the Bank will resume its asset purchase programme – but it will probably do so half-heartedly, which could …
11th February 2019
We think that inflation in Switzerland will fall below zero by the middle of the year, so the SNB is likely to stick to its very dovish policy stance. By contrast, we think that inflation in Norway will rise and the Norges Bank will raise interest rates …
The publication of macroeconomic forecasts by the European Commission is not normally a market-moving event. But the extent of the downward revisions to its GDP forecasts seemed to take the financial markets by surprise when they were published on …
8th February 2019
At its meeting next week, the Riksbank is likely to deliver a dovish message, perhaps hinting that even the single rate hike that it has pencilled in for this year is now in doubt. … Riksbank to strike a dovish note next …
While the Swiss franc has not benefitted much from recent upheaval in markets, including yesterday’s sell-off in US equities, it has been very stable. We expect this to remain the case in 2019, as slowing global growth and concerns about Italy support the …
Norway’s economy ended 2018 on a high note, but we doubt that this will last. We suspect that lower oil prices and weaker activity elsewhere in Europe will weigh on growth, prompting the Norges Bank to tighten monetary policy more slowly than it currently …
With the euro-zone economy slowing and the ECB short of ammunition, there will be growing calls for a big fiscal stimulus from Germany. However, we suspect that the German government will fall short of the fairly modest stimulus in its 2019 budget, and …
7th February 2019
The Danish krone is now close to the centre of the central bank’s exchange rate band – a level at which it has in the past unilaterally raised interest rates. However, we think it is likely to leave rates on hold throughout this year and 2020, not least …
December’s decline in German industrial production adds to the evidence that the economy was struggling in Q4. At face value it suggests that GDP may have declined in the fourth quarter after all. … German Industrial Production …
Economic activity finished last year on a weak note and most business surveys suggest that things did not improve in January. Italy went back into recession in the second half of 2018 and the evidence suggests that economic activity there has continued to …
6th February 2019
