Strong recovery to continue in Q3

The surge in spending as coronavirus restrictions have been lifted will bring the euro-zone economy close to its pre-pandemic level in the coming months. After expanding by 2% q/q in Q2, we expect a similar increase in Q3. Both business and consumer sentiment are strong and order books are full. High frequency mobility data also suggest that things are getting back to normal. The main exception is the tourist sector; although there has been a big increase in flight numbers in the past few weeks, it is still running well below normal levels. Meanwhile, inflation rose above 2% in July and there is mounting price pressure in supply chains, while producer price inflation reached double-digit levels and points to HICP inflation rising further in the coming months. That said, we are confident that inflation will drop back again next year to below the ECB’s 2% target.
Andrew Kenningham Chief Europe Economist
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European Data Response

EZ Unemployment (Oct.)

While labour market conditions continued to improve in October, the recent deterioration of the Covid situation and increased uncertainty due to the Omicron variant are likely to mean the recovery takes a breather over the next couple of months, just as it did when restrictions were in place at the start of 2021.

2 December 2021

European Economics Update

Macron on course to defeat far-right challengers

The confirmation earlier today that far-right pundit Eric Zemmour will stand in France’s presidential election next spring comes as no surprise given his rise in the polls. But French President Emmanuel Macron still looks on course to win a second term, defeating the far-right candidates and keeping France on a pro-European, reformist track. In this Update, we answer five key questions about the election.

30 November 2021

European Data Response

Euro-zone Flash HICP (Nov.)

November’s inflation data were yet another surprise on the upside. The Omicron variant has increased the level of uncertainty even further but for now we suspect that it will have a fairly small impact on inflation. Still, headline inflation looks set to remain above target until at least the end of next year.

30 November 2021

More from Andrew Kenningham

European Data Response

Euro-zone Final PMIs (July) and Retail Sales (June)

The final PMIs show that the euro-zone’s recovery continued apace at the start of Q3. Price pressures are continuing to mount and point to an increase in inflation in the coming months, but we expect this to be temporary. Meanwhile, retail sales increased again in June, to nearly 5% above pre-pandemic levels.  

4 August 2021

European Economics Weekly

Reopening effects to persist in Q3

The surge in German inflation, to 3.8% on the national CPI measure in July, may have got some pulses racing in Frankfurt, but core euro-zone inflation remains very low and we continue to think that the ECB will struggle with excessively low inflation over the medium term. Next week we expect to learn that euro-zone retail sales rose again in June and the Composite PMIs for Spain and Italy increased in July.

30 July 2021

European Data Response

Euro-zone GDP and Employment (Q2)

After increasing more than expected in Q2, thanks to strong growth in the southern economies, euro-zone GDP should expand rapidly again in Q3 as core economies close in on their pandemic levels. China slowdown webinar: Join us on Thursday, 5th August for a special webinar assessing the impact of China’s economic slowdown on the global recovery. Neil Shearing will lead a discussion with economists from across our economics and markets services to assess whether investors should brace for fresh volatility with China poised for a structural deceleration. Register here for sessions at 0900 BST/1600 HKT or 1100 ET/1600 BST.  

30 July 2021
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