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Like much of the rest of the euro-zone, Italy’s economy got off to a decent start to the year. However,the outlook for growth remains weak and the risks to the recovery are mounting. Eventually, theycould call Italy’s future in the currency union into …
16th May 2016
Despite the downward revision to Q1 euro-zone GDP, the 0.5% quarterly gain still got the year off to a solid start. But there are good reasons to expect growth to be slower in Q2 and beyond. And the bigger picture is that the euro-zone economy remains …
13th May 2016
While Q1’s 0.5% quarterly gain in euro-zone GDP provides a reasonably solid start to the year, there are good reasons to expect growth to slow in Q2 and beyond. … Euro-zone GDP (Q1 …
March’s contraction means that industry looks likely to have accounted for about 0.2%-points of the euro-zone’s 0.6% q/q GDP growth rate in Q1. But the underlying trend in output is weak, and surveys suggest that growth will be subdued in Q2. … …
12th May 2016
The Norges Bank left its key policy rate unchanged today, but with the economy weak and inflation set to fall this year, we think that further loosening is on the way. … Norges Bank policy unchanged, but rate cut on the …
The rise in Swedish inflation will prove short-lived if inflation expectations stay below 2%. In order to boost such expectations, the Riksbank must ensure that the krona does not appreciate strongly. … Swedish inflation outlook dependent on krona …
The compromises reached by Greece and its creditors this week should allow the first bailout review to finally be completed and have prompted a favourable market response. But the first discussions about debt relief offer little hope of a solution to …
11th May 2016
Iceland’s central bank kept its interest rates unchanged for the fourth consecutive meeting. But with price pressures set to pick up in the second half of the year, further tightening will be needed. … Iceland holds rates but further tightening will be …
Despite March’s sharp fall in German industrial production, the sector appears to have contributed strongly to GDP growth in Q1. However, evidence from the business surveys suggests that underlying growth in the sector remains weak. … German Industrial …
10th May 2016
The formation of a new Irish government has removed some short-term political uncertainty. And the outlook for the economy over the coming years is fairly bright. That said, the government can do little to shelter Ireland’s very open economy from …
9th May 2016
Last week’s EC Spring forecasts presented a pretty uninspiring picture of the euro-zone economy’s prospects. Despite the unprecedented degree of monetary policy support, growth is expected to slow this year and inflation to remain well below the ECB’s …
6th May 2016
Full year general government figures for 2015 show that most euro-zone countries’ fiscal positions improved last year, although Portugal and Spain still fell short of their targets. Meanwhile, timelier central government data show that Greece has made a …
5th May 2016
Euro-zone GDP rose by a healthy 0.6% in Q1, easily outpacing the expansions in the US and UK and following disappointingly slow growth in the second half of 2015. But the data look strong relative to survey measures of activity, such as the Composite …
March’s euro-zone retail sales data appear to confirm that strong consumer spending supported growth in Q1, but we doubt that this will be sustained . Indeed, April’s Composite PMI points to a slight slowdown in GDP growth in Q2. … Euro-zone Retail …
4th May 2016
Last week’s decision by DBRS to maintain its investment grade credit rating for Portugal has brought short-term relief. But with the economic recovery likely to slow this year and the public finances only improving gradually, concerns about debt …
3rd May 2016
The first round result of Austria’s presidential election is testament to how polarising the issue of immigration has become in European politics. However, a crackdown on immigration could deny Austria a much needed boost to growth. … Anti-immigration …
29th April 2016
Q1’s surprisingly strong gain in euro-zone GDP provided a solid start to the year. But we suspect that the figures overstate the economy’s underlying pace of expansion and there is a clear risk of a further slowdown ahead. Accordingly, we are not …
The euro-zone’s new earlier (“preliminary flash”) estimate of GDP confirmed the message from country data that the economy regained some pace in Q1 after the slowdown in H2 last year. But growth is likely to slow in Q2 and beyond. … Euro-zone Preliminary …
Political uncertainty and slowing growth imply that Spain’s budget deficit targets are too optimistic. As such, Spain looks set to breach the EU’s 3% deficit limit for at least two more years. And , in contrast to European Commission expectations, the …
28th April 2016
April’s fall in German consumer price inflation back to negative territory and the continued weakness of the core rate will further raise the pressure on the ECB to do more to hit its inflation target. … German Flash CPI …
April’s rise in euro-zone business and consumer confidence does not change the bigger picture that growth in the euro-zone appears to be slowing. … EC Business & Consumer Survey …
March’s euro-zone monetary data suggest that economic growth remains fairly slow . While the ECB has since expanded its stimulus measures, we doubt that this will boost money and lending growth significantly. … Euro-zone Monetary Indicators Monitor …
27th April 2016
April’s German Ifo survey supports the message from other surveys like the PMI and ZEW that growth is still fairly slow . This suggests that underlying inflation will remain subdued and perhaps undermines the argument that monetary policy is far too …
25th April 2016
This report is only available as a PDF. Click to download. … Will bank worries prevent further ECB rate cuts? …
22nd April 2016
The small fall in April’s euro-zone PMI suggests that the weakening of the region’s activity surveys this year has been due to more than just concerns about overseas demand, which have eased recently. What’s more, the survey implies that underlying price …
President Draghi struck a dovish tone following the ECB’s April policy meeting and stressed that the Governing Council was prepared to offer more policy support if needed. But while we expect the asset purchase programme to be extended in time, the Bank …
21st April 2016
Sweden’s Riksbank expanded its QE programme and kept its options open for easing later in the year. While the economy is growing strongly and inflation has picked up recently, a rising currency and fairly weak inflation outlook might prompt further …
April’s rise in German ZEW investor sentiment reflected easing concerns about the global economic environment. But perceptions of current conditions in Germany have weakened, supporting our view that growth will slow this year. … German ZEW …
19th April 2016
The protracted and difficult negotiations surrounding the first review of Greece’s third bailout underline the challenges that still lie ahead for Greece, its creditors and the euro-zone’s institutions to find a lasting solution to the country’s debt …
18th April 2016
While we’re still hopeful that the divergence between US and euro-zone monetary policy will help to bring the euro lower against the US dollar, the combination of the Fed’s recent dovishness and hints from the ECB that it is running out of policy …
15th April 2016
This report is only available as a PDF. Click to download. … Euro-zone Trade (Feb.) …
President Draghi will respond to German politicians’ recent criticism of the ECB’s ultra-loose policy at the meeting on 21st April by reiterating the Bank’s independence and stressing that more support is still possible. But it seems clear that it is …
The euro-zone’s gradual recovery appears to be slowing as we had warned as boosts from the euro’s depreciation and falling oil prices fade. However, the ECB has hinted at limits to its future policy support and the euro-zone region will continue to suffer …
14th April 2016
Despite February’s fall in industrial production, the sector looks likely to have had a fairly strong Q1. But survey evidence suggests that this is unlikely to be sustained. … Euro-zone Industrial Production …
13th April 2016
ECB officials appear to be trying to strike a balance between holding the door open to further policy action and yet stressing the limitations of monetary policy in order to pressure governments into taking steps themselves to encourage growth. But there …
8th April 2016
February’s rise in euro-zone retail sales volumes caused the annual growth rate to pick back up to a healthy 2.4% and suggests that total consumer spending growth accelerated in the first quarter compared to Q4. But spending volumes have been boosted …
6th April 2016
February’s surprisingly small fall in German industrial production offers hope of a pick-up in GDP growth in the first quarter. But it is too early to conclude that the euro-zone’s main growth engine is now firing on all cylinders. … German Industrial …
After years of recession, the Italian economy returned to growth last year and further policy support could see the recovery pick up slightly in 2016. But there has been little improvement in the economy’s potential growth rate, so the recovery will …
5th April 2016
The latest fiscal data for central governments show that Greece made a notably strong start to 2016 while the performance over the periphery as a whole was mixed . Meanwhile, the first releases of annual general government data for 2015 were positive …
February’s euro-zone retail sales data point to strong consumer spending growth in Q1, but we doubt that this will be sustained. And the downward revision to March’s Composite PMI added to signs that the overall recovery is slowing. … Euro-zone Retail …
The public spat between Greece and the IMF underlines the fragility of the country’s latest bailout deal and demonstrates that its long-term future inside the currency union is still far from assured. … Greece/IMF spat underlines fragility of …
4th April 2016
February’s fall in euro-zone unemployment suggests that the labour market remains in reasonable health, but it is still too weak to generate any real inflationary pressure. … Euro-zone Unemployment & Producer Prices …
We have argued for some time that the consumer recovery, which was the main driver of growth in 2015, would slow this year. Last week brought further evidence that this process is underway. Declining consumer confidence and signs that the labour market …
1st April 2016
Recent weak activity and inflation data in the euro-zone have underlined the fact that the ECB cannot afford to simply sit back and allow the euro exchange rate to strengthen further. … The ECB can’t afford to ignore the …
31st March 2016
Cyprus’ exit from its bailout and budding economic recovery are good news. But major challenges lie ahead in addressing non-performing loans and generating growth outside the financial services sector. We see Cyprus not as the great success story that it …
The Norges Bank has clearly become more concerned about threats to financial stability, but we do not think that this will prevent it from cutting the policy rate to zero by the end of the year. … Will financial stability concerns prevent Norges Bank …
30th March 2016
March’s falls in euro-zone business and consumer confidence support other evidence that the region’s slow recovery is losing pace. … EC Business & Consumer Survey, German HICP …
