Tag Archives: euro area growth prospects

Accelerating growth in France and Italy should make the ECB more confident about its plans for policy normalisation.The current leg of the euro area recovery is about both quantitative and qualitative improvement in the economic outlook.Trend GDP growth in France and Italy has risen to 2.2% and 1.8%, respectively, on an annualised basis. Those countries are catching up with the strongest member states, more than compensating for the moderate growth slowdown we forecast in Germany and...

GDP shows economic performance is somewhere between what hard and soft data are suggesting.According to Eurostat’s preliminary flash estimate released today, euro area real GDP expanded by 0.5% q-o-q in Q1 2017 (+0.455% q-o-q; 1.8% q-o-q annualised; 1.7% y-o-y), slightly above consensus expectations (0.4%). This flash estimate confirms that most business confidence surveys overestimated growth at the beginning of the year, with the ‘true pace’ of economic expansion lying somewhere in between...

The latest confidence surveys in the euro area have been remarkably strong, adding upside risks to our GDP forecasts, but meaning that the ECB will have to tread carefully.Recent composite purchasing manager surveys for the euro area are consistent with a growth rate of about 0.7% q-o-q in Q1, above our projection of 0.4%, and are pointing to similar levels of growth in Q2. More generally, ‘soft’ survey data and ‘hard’ activity data have been diverging significantly of late, with large...