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Despite weaker-than-expected Swedish inflation in August, price pressures are set to increase in the coming months. And as higher inflation feeds through to inflation expectations, the Riksbank will need to start to thinking about tightening policy. … …
13th September 2016
Since the UK’s Brexit vote, eurosceptic parties elsewhere have increased their calls for referendumson EU or euro membership. While the potential for eurosceptics to gain power and hold votesvaries widely across Europe, growing unrest over the issue looks …
12th September 2016
The ECB’s decision last week not to announce an extension to its asset purchase programme led us to revise our year-end forecast for the euro exchange rate. But we still think that looser monetary policy will eventually weaken the single currency. … …
9th September 2016
President Draghi suggested today that a dramatic increase in ECB policy support is not imminent. But we still expect the Bank to extend its QE programme by six months to next September and it may yet have to increase the pace of its assets purchases next …
8th September 2016
The first official euro-zone data release for July – retail sales – suggested that the consumer sector made a strong start to Q3. Indeed, the 1.1% rise in sales pushed the annual growth rate up to 2.7%, its strongest in five months. However, this is …
With the Riksbank on hold, rising inflation means that real interest rates in Sweden are set to dropto a 40-year low. Such an accommodative stance seems unnecessary given the sound economic outlook and we suspect that the Bank will raise interest rates …
7th September 2016
July’s drop in German industrial production may have partly reflected temporary factors, but it provides a very weak base for GDP in Q3. The industrial sector should resume its expansion in the coming months, but at a fairly slow pace. … German …
With the Riksbank on hold, rising inflation means that real interest rates in Sweden are set to drop to a 40-year low. Such an accommodative stance seems unnecessary given the sound economic outlook and we suspect that the Bank will raise interest rates …
Today’s final estimate of Q2 GDP confirmed that the slowdown in growth from the first quarter was largely due to household spending. Over the rest of the year, we think that consumer spending will remain subdued, while export growth will slow. … Euro-zone …
6th September 2016
Q2’s healthy rise in Swiss GDP suggests that the economy was coping well with the franc’s continued strength, but the increase was flattered by temporary factors. And while CPI inflation edged up in August, deflationary risks remain acute. … Swiss GDP …
As Mariano Rajoy would benefit most from another election, his opponents may yet let him form a government. But with the public finances deteriorating and the deadline for the 2017 budget to be submitted to the European Commission looming, the risk of …
5th September 2016
Euro-zone government finances at the start of the third quarter of 2016 were much more of a mixed bag than the reasonably impressive figures from the first half of the year. Worryingly, the data suggest that Portugal and Spain, having recently avoided …
Euro-zone retail sales started Q3 strongly but growth is set to slow in the coming months. Indeed, the downward revision to August’s euro-zone Composite PMI hints at the challenges facing the economy during the remainder of the year. … Euro-zone Retail …
Euro-zone equity prices have risen so far in Q3, painting a more optimistic picture of the economy’s performance than the consumer and business surveys. However, there are two reasons why we think that the surveys, which suggest that growth might have …
2nd September 2016
Recent news on the economy has reduced the pressure on the European Central Bank (ECB) to provide further policy stimulus at its forthcoming policy meeting on 8th September. But the weakness of price pressures in the region could still prompt the …
1st September 2016
The unchanged headline inflation rate in August highlights the fact that price pressures in the euro-zone remain weak and boosts the case for more monetary easing from the ECB. … Euro-zone Flash CPI (Aug.) & Unemployment …
31st August 2016
The hit to Norway’s GDP growth from lower oil prices appears to be fading. Nevertheless, with growth still fairly slow and inflation set to fall sharply, we still expect the Norges Bank to loosen monetary policy this year. … Norwegian GDP …
In Q2 Danish GDP growth was worryingly dependent on external demand and a drop in imports, while survey indicators suggest that the economy will struggle to grow over the coming months. … Danish GDP (Q2 …
The hit to Norway’s GDP growth from lower oil prices appears to be fading. Nevertheless, with growth still fairly slow and inflation set to fall sharply, we still expect the Norges Bank to loosen monetary policy this year. … Norwegian GDP (Q2 …
August’s slowdown in German inflation was weaker than most forecasters had expected last week, but was broadly consistent with the state-level data released this morning. While inflation should pick up in the coming months, we do not think that it is on …
30th August 2016
August’s euro-zone Business and Consumer Survey suggests that growth has slowed and inflation expectations are weak. So the ECB will be under pressure to loosen monetary policy further at its meeting next week. … EC Business & Consumer Survey …
Italy’s forthcoming referendum on constitutional reform is expected to take place in October or November. If the reform is accepted, it could make governments more stable and passing legislation easier. However, if it is rejected, Italy will be in for a …
26th August 2016
The euro-zone Composite PMI has held up well since the UK’s Brexit vote, but it is too soon to sound the all clear. After all, the Composite PMI measures current output rather than indicating how conditions might develop. Forward-looking indicators have …
July’s money and credit data show a pick-up in lending growth, despite concerns about banks’ health and the UK’s vote for Brexit. Nevertheless, the data suggest that inflation will remain weak. … Euro-zone Monetary Indicators Monitor …
August’s sharp fall in the German Ifo survey points to a slowdown in annual German economic growth to around 1%. … German Ifo Survey …
25th August 2016
Today’s rate cut by the Sedlabanki is likely to be a one-off. Indeed, the recent acceleration of economic growth suggests that the risks to the Bank’s new inflation forecasts are tilted to the upside. … Rate cut in Iceland set to be a …
24th August 2016
August’s slight rise in the euro-zone Composite PMI suggests that, while the region has so far weathered the UK’s Brexit vote, economic conditions remain fairly subdued. … Euro-zone Flash PMIs …
23rd August 2016
The sharp rise in Portugal’s bond yields last week reflected justified concerns about the government’s credit rating. While the Government intends to stick to the EU’s fiscal rules, slow economic growth will leave its credit rating in doubt for some time. …
22nd August 2016
Most information about Germany implies that the economy has continued to perform well after the UK’s Brexit vote. The main exception is the ZEW survey, which suggests that GDP growth could drop to zero. However, while the ZEW shouldn’t be disregarded …
19th August 2016
If the ECB is to accelerate and extend its asset purchases next month as we anticipate, it will need to address the programme’s limitations, particularly relating to German debt. We think that the ECB could buy a higher proportion of the Bunds that are …
18th August 2016
With Dutch housing investment back at pre-crisis levels, there is little scope for further strong growth. And although interest rates are at record lows, surveys suggest that firms have little need to boost investment. As a result, Dutch investment growth …
17th August 2016
August’s German ZEW investor survey shows that sentiment has partly recovered from July’s Brexit-related decline, but it still points to a sharp slowdown in German GDP growth to come. … German ZEW Survey (Aug.) & Euro-zone Trade …
16th August 2016
Italy’s economic recovery is slowing. And with big risks to the near-term outlook from the banking sector and the forthcoming referendum on constitutional reform, we suspect that the economy is heading back into a long period of economic stagnation or …
15th August 2016
Last week’s euro-zone Q2 GDP data revealed a strong contrast between the region’s strongest and weakest performers, with the French and Italian economies looking particularly vulnerable. In the second half of the year, we expect growth across the region …
12th August 2016
While Q2’s GDP growth was left unrevised at 0.3% in the second estimate, the softoutlook for both growth and inflation suggests that the ECB still has more work to do. … Euro-zone GDP (Q2 …
Swedish inflation unexpectedly reached a fresh four-year high in July. But inflation is still below the Riksbank’s target and it is too soon to rule out further policy action. … Swedish Consumer Prices …
11th August 2016
Swedish inflation unexpectedly reached a fresh four-year high in July. But inflation is still below the Riksbank’s target and it is too soon to rule out further policy action. … Swedish Consumer Prices (Jul. …
Inflation in Norway has been much stronger than the central bank forecast in June, so an interest rate cut in September looks unlikely. But we still expect inflation to fall sharply over the next 12 months. So policy loosening should come back on the …
10th August 2016
Despite June’s rise in German industrial production, output in the sector fell in Q2 compared to Q1. Industrial growth should pick up a little in the months ahead, but it is likely to remain subdued by Germany’s past impressive standards. … German …
8th August 2016
The Bank of England’s policy action last week added to the pressure on the ECB to do more. At the moment, the ECB’s self-imposed restrictions would prevent a large expansion of its asset purchase programme. But those limitations can be amended, so should …
5th August 2016
The UK’s Brexit vote does not appear to have had a marked adverse impact on the euro-zone economy so far as the main survey indicators rose slightly in July. But Q2 GDP data confirmed that economic activity was already slowing before the referendum: GDP …
4th August 2016
The early signs are that while the euro-zone economy has been largely unharmed by the UK’s vote for Brexit, the Irish economy, which has particularly strong trade links with the UK, has taken a hit. That said, it is far too early to suggest that the vote …
With no sign of a government, a third Spanish election is possible. Even if one is avoided, Catalonia’s bid for independence means that political uncertainty will continue to darken Spain’s prospects. … No sign of an end to political uncertainty in …
3rd August 2016
Public finances improved across the region in Q1, and timelier central government data suggest that the peripheral countries continued to perform well in Q2. Meanwhile, Portugal and Spain avoided fines for breaking fiscal rules, but even adjusted targets …
June’s stagnation of euro-zone retail sales suggest that consumer spending ended Q2 on a weak note. And despite a small upward revision from the flash release, July’s Composite PMI points to subdued economic growth at the start of Q3. … Euro-zone Retail …
Sweden’s weak Q2 GDP growth rate is at odds with both the monthly economic data and the positive tone of recent surveys. As such, we suspect a decent rebound is on the cards for Q3. … Swedish fundamentals stronger than Q2 GDP data …
2nd August 2016
