Euro-zone outperformance will be short-lived

The euro-zone economy looks likely to have outgrown both those of the US and UK in the first quarter of the year, for the first time since Q1 2011. But the outperformance looks set to be short-lived. Not only are the slowdowns in the US and UK likely to prove temporary, but there are tentative signs that the euro-zone recovery is already starting to lose a bit of steam, perhaps in response to the Greek crisis. We continue to expect euro-zone GDP growth of about 1.5% in 2015, roughly half the rates likely in the US and UK. What’s more, in contrast to consensus expectations of a further acceleration in 2016, we suspect growth will slow next year as the positive effects of the falls in oil prices and the euro fade.