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.  
Andrew Kenningham Chief Europe Economist
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European Economics Weekly

Wage growth to stay weak, inflation to keep rising

Data published this week highlight the challenge to euro-zone consumers from subdued pay growth and rising inflation. We expect inflation to keep rising in the coming months, and probably further than most expect. Next week, we will host a Drop-in webinar on the causes and effects of the recent surge in European gas prices.

17 September 2021

European Data Response

Euro-zone Final HICP (Aug.)

Rising costs – from shipping to energy – are likely to push euro-zone inflation up even further in the coming months. They might also mean that it doesn’t fall quite as quickly next year as we currently assume. But by the end of 2022, we still suspect that inflation will be a long way below the ECB’s target.

17 September 2021

European Data Response

EZ Hourly Labour Costs (Q2) & Ind. Prod. (Jul.)

The sharp fall in euro-zone average hourly labour costs in Q2 compared to a year earlier was mainly due to pandemic-related distortions to the data that will continue to muddy the picture for another couple of quarters. Nevertheless, the spare capacity in the labour market will keep wage growth subdued.

15 September 2021

More from Andrew Kenningham

European Data Response

Germany Flash Inflation (July)

The increase in German inflation to nearly 4% on the CPI measure was partly due to last year’s VAT cut and partly due to rising energy and food inflation, all of which should prove short-lived. Inflation is likely to drop back sharply early next year and to settle below 2% over the medium term.

29 July 2021

European Data Response

German Ifo Survey (July)

The small decline in the Ifo Business Climate Index in July suggests that the rebound in Germany may be losing some momentum. But Germany will still post very rapid GDP growth in both Q2 and Q3 and should regain its pre-pandemic level ahead of any other major euro-zone country.

26 July 2021

European Economics Weekly

Negative rates and QE forever?

The change in the ECB’s policy guidance, announced yesterday, strengthens our view that the Bank will leave its deposit rate unchanged at -0.5% until beyond 2025 and will continue with large-scale asset purchases for a long time yet. Meanwhile, although we don’t think the surge in virus numbers will derail the economy, it may take the shine off the recovery. Next week we expect to learn that euro-zone GDP rose by around 1.5% q/q in Q2 and that inflation edged above 2% again in July.

23 July 2021
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