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The hard data available so far for Q3, as well as the more timely activity surveys, suggest that the economy performed fairly well last quarter. GDP growth probably maintained its pace from Q2 and may even have picked up slightly. But the ECB is likely to …
2nd October 2015
The consumer outlook has dimmed slightly over the summer, suggesting that the economic recovery needs to become more broad-based if it is to gain momentum. The Q2 GDP breakdown showed that the quarterly pace of household spending growth slowed again. …
1st October 2015
The improvement in most peripheral countries’ current account positions since the financial crisis should not be fully reversed as their economies recover. However, if and when Greece returns to “normal”, it will need a significant devaluation to avoid …
The euro-zone’s peripheral economies appear to have strengthened their fiscal positions further in the year to August. But for most, this year’s budget targets still look ambitious. … Euro-zone Fiscal Monitor …
30th September 2015
Today’s decision by Iceland’s central bank to leave its main interest rates on hold merely marks a pause for breath in its tightening cycle. We think that further rate rises will be needed before the end of the year. … Icelandic interest rates on hold, …
The return of inflation to negative territory in the euro-zone, as well as the continued high rate of unemployment, will heap further pressure on the ECB to increase its stimulus. … Euro-zone Flash CPI (Sep.) & Unemployment …
Today’s decision by Iceland’s central bank to leave its main interest rates on hold merely marks apause for breath in its tightening cycle. We think that further rate rises will be needed before the endof the year. … Icelandic interest rates on hold, but …
September’s drop in inflation back below zero for the first time since January highlights that price pressures are very subdued and will add to pressure on the ECB to increase its policy support. … German Flash CPI …
29th September 2015
This weekend’s general election in Portugal looks set to be a close contest with a minority government currently appearing the most likely outcome. But whichever party ends up on top, it faces an uphill struggle in keeping the country’s nascent economic …
September’s EC business and consumer survey suggests that the economic recovery maintained its pace in Q3. But growth was still fairly slow and we think that the ECB will need to increase its stimulus to provide a further boost to the economy. … EC …
The high level of consumer and business confidence in September added to the recent run of positive data coming from Italy. But strong confidence alone will not be enough to secure a sustained economic recovery. … Rising Italian confidence not enough to …
28th September 2015
The gradual recovery in the Dutch housing market looks set to continue, supported by rising realdisposable incomes, mortgage lending growth and government policy. This bodes well for bothhousehold spending and investment, suggesting that the wider …
25th September 2015
The news last week that Volkswagen had cheated emissions tests prompted speculation that “Made in Germany” branding had been dealt a blow that could seriously jeopardize the economy’s prospects. Given the importance of the car industry to German output …
August’s euro-zone monetary data point to low inflation and continued sluggish growth, adding to the evidence that more monetary stimulus from the ECB isnecessary. The run on Greek banks seems to have slowed or even ended, but lending there is likely to …
The Norges Bank’s decision to cut its policy rate today was accompanied by a suggestion that further interest rate cuts could follow. We think that another cut could come in Q2 next year. … Norges Bank cuts rates and signals more loosening to …
24th September 2015
The small rise in the German Ifo index in September came as a modestly pleasant surprise in light of the recent softening in some other business surveys. But the China slowdown and VW scandal present clear threats to the outlook. … German Ifo Survey …
Italy’s public debt load is worryingly high, but private sector debt is much less of a concern. This provides some grounds for optimism that a recovery in the private sector which increases the size ofthe economy could eventually help to bring down the …
23rd September 2015
September’s dip in the euro-zone composite PMI left it pointing to steady GDP growth in Q3. But the uncertain global environment and fading boosts from thelower oil price and weaker euro look set to see growth slow in the months ahead. … Euro-zone Flash …
This weekend’s regional election could put Catalonia on a course towards secession, casting a cloudover Spain’s recovery and galvanising other independent-minded regions of the euro-zone … Catalan cloud could rain on …
22nd September 2015
While the result of Greece’s election strengthens the Syriza-led government’s mandate to implement the country’s third bailout, the major challenge for both Greece and its creditors – to find a workable and lasting solution to its unsustainably high debts …
21st September 2015
The boost to activity and inflation from the euro’s weakening since last summer will soon begin to fade. The ECB might feel that it can wait for tighter monetary policy in the US to drag the euro lower, providing a renewed stimulus to the euro-zone’s …
18th September 2015
Suggestions that a defeat for the Syriza party in this weekend’s Greek election would kill off the eurozone’s anti-austerity movement are over the top. But there is little prospect of Germany and the eurozone’s institutions significantly loosening the …
17th September 2015
The recent depreciation of the Swiss franc and renewed increase in economic activity has allowed the Swiss National Bank (SNB) to keep policy on hold for the time being. But we think that renewed upward pressure on the currency and further export weakness …
The likelihood that inflation will soon fall, as well as signs that Norway’s economy has continued to slow in Q3, is likely to prompt the Norges Bank to loosen policy again next week. … Norges Bank likely to cut its policy rate next …
16th September 2015
Whichever party wins this Sunday’s Greek election is likely to stick broadly to the conditions of the new bailout in the near term. But even an austerity-minded government will struggle to meet future budget goals as the economy underperforms. …
15th September 2015
September’s ZEW survey confirmed that recent market turmoil and concerns over the global environment have had an adverse impact on German investor confidence. For now, though, the economy itself remains robust. … German ZEW …
The euro-zone’s goods trade surplus rose to a record high in July, adding to the evidence that the economy got off to a good start in Q3. But we suspect that the trade surplus will fall in the second half of the year as the effects of the weaker euro …
July’s rise in industrial production merely offset the declines in the previous two months, so is not the beginning of a stronger upward trend in the sector. The survey evidence points to fairly sluggish growth over the rest of the year. … Euro-zone …
14th September 2015
We don’t expect the prospect of higher US interest rates to hit the euro-zone too hard. But the ECB should not take any chances and certainly should not rely on higher US interest rates to lower the euro and boost the economy. … Will Fed lift-off hit or …
11th September 2015
It looks increasingly likely that the ECB will expand its asset purchase programme, possibly even as soon as next month. We think that the Bank will step up the pace of purchases, perhaps to €80bn per month. It might also suggest that those purchases will …
10th September 2015
Ireland’s impressive recovery continued in Q2. And with the conditions in place for sustained rapid growth, it is set to remain the euro-zone’s fastest-growing economy. … Ireland GDP …
Anxiety about Grexit may have subsided but the underlying issues have not changed. Greece still needs a weaker currency. The well-worn argument that Greece would not be able to take advantage of a weaker currency because it is a fairly closed economy has …
8th September 2015
Revisions to euro-zone GDP showed that the economy was slightly stronger in the first half of the year than previously thought. However, with inflation likely to fall and growth remain sluggish, we still think that the ECB will expand its policy support. …
Since the financial crisis, internal devaluation appears to have provided only a modest boost to Ireland’s trade balance. More important to the economic recovery has been the pick-up in domestic demand. Ireland has also benefitted from a number of …
7th September 2015
July’s German industrial production figures revealed a smaller than expected rebound after June’s decline and put an early dent in hopes of a re-acceleration in growth in the third quarter. … German Industrial Production …
Despite the better tone to the economic data coming out of the euro-zone in recent weeks, we still expect growth to slow in the second half of the year as the twin tailwinds of the lower oil price and weaker euro fade. As such, last week’s hints from ECB …
4th September 2015
While the European Central Bank (ECB) left its key policy instruments unchanged today, changes to its bond purchase limits and President Mario Draghi’s dovish signals appeared to pave the way for an increase in its policy support in the coming months. … …
3rd September 2015
The rise in euro-zone retail sales in July more than offset the decline in June and suggests that the consumer recovery remains on track. Meanwhile, the final PMIs highlighted the continued poor performance of the French economy. … Euro-zone Retail Sales …
The decision by Sweden’s Riksbank to leave its monetary policy stance unchanged suggested that it has been reassured by the recent run of better-than-expected activity and inflation data. But with inflation still below zero and no let-up in deflationary …
While the crisis in Greece appears to have receded at least temporarily, the euro-zone still faces serious challenges in the form of weak growth and persistent deflation risks. As the Chart below shows, the recent weakness in oil prices and rise in the …
2nd September 2015
The euro-zone’s peripheral economies appear to have strengthened their fiscal positions further at the start of Q3. But this year’s budget targets still look elusive for most. Greece, in particular, will struggle given the renewed slump in economic …
1st September 2015
The latest euro-zone unemployment data offered hope that the slow recovery in the region’s labour market has not gone into reverse. But the bigger picture is that unemployment remains too high to boost wage growth and inflation. … Euro-zone Unemployment …
Emerging Asia's PMIs remained weak in August, suggesting the region’s manufacturing sectors continue to struggle. In the three economies where the PMIs most closely track the hard data, the surveys point to further declines in manufacturing output. … …
August’s inflation data confirmed that price pressures in Germany are very subdued,underlining the need for continued and perhaps increased ECB policy support. … German Flash CPI …
28th August 2015
We are fairly relaxed about the impact of a slowdown in China on the euro-zone. Most importantly, this is because the concerns about the Chinese economy look overblown. And in any case, the direct trade links between the euro-zone and China are fairly …
August’s EC business and consumer survey provides some reassurance that the eurozone’s economic recovery has continued in Q3, despite the turmoil in global stock markets this month. But the pace of growth is still fairly weak. … EC Business & Consumer …
