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Euro-zone Retail Sales (Mar.) & Final PMIs (Apr.)

The decrease in euro-zone retail sales in March is the first indication from official data that the war in Ukraine is weighing on consumption. With the final PMI surveys pointing to price pressures intensifying and firms remaining pessimistic, we think 2022 will be a year of stagflation for the euro-zone.
Michael Tran Assistant Economist
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European Economics Update

Rhine troubles add to pressure on German industry

The fall in the Rhine’s water level is a small problem for German industry compared to the gas crisis, or indeed the recent shortage of semiconductors. But if it persists until December it could subtract 0.2ppts from GDP in Q3 and Q4 and add a touch to inflation.

10 August 2022

European Economics Focus

How big is the threat of an end to Russian gas exports?

An end to Russian gas exports to Europe would prompt us to forecast a deeper recession in the euro-zone this winter than we currently anticipate. The hit would come partly through higher inflation, which would further squeeze real incomes, and partly through gas rationing, which would particularly affect industry. As an illustrative scenario we think the combined effect would reduce annual GDP by around 2% in the euro-zone next year relative to our current forecast.

9 August 2022

European Economics Weekly

Heading for recession, ECB using PEPP flexibility

The activity data published this week add to the evidence that the economy is heading for recession. Meanwhile, the ECB published data showing the degree of flexibility that it has applied to its PEPP reinvestments - while this has been enough to contain bond spreads so far, we think there is a good chance that the Bank’s new spread-fighting tool will eventually have to be used.

5 August 2022

More from Michael Tran

European Data Response

Euro-zone Consumer Confidence (Apr.)

The rise in consumer confidence in April was slightly better than expected. Nevertheless, confidence is still very low and points to household spending falling in April. That’s consistent with our assumption that the euro-zone economy will contract in Q2 as consumption declines.

21 April 2022

Nordic & Swiss Data Response

Sweden Consumer Prices (Mar.)

The stronger-than-expected increase in Swedish inflation in March is likely to give more ammunition to the hawks in the Riksbank, and lends support to our view that the Bank will start to raise the repo rate and press ahead with “QT” this year.

14 April 2022

European Data Response

EZ Retail Sales & German Industrial Production (Feb.)

The small increases in euro-zone retail sales and German industrial production suggest that economic activity was growing at a modest pace in February. With much higher energy prices now weighing on manufacturing and consumption, the euro-zone economy is likely to struggle over the coming months.

7 April 2022
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