Delta variant not weighing on Italian recovery

Data released today confirmed that the Italian economy grew strongly in Q2, supporting our above-consensus forecast for the year as a whole. Timelier data suggest that concerns about the Delta variant have not crimped the services recovery, but supply chain problems could hold back Italian industry.
Jack Allen-Reynolds Senior Europe Economist
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European Economics Weekly

ECB’s line on inflation contrasts with the Fed’s

In contrast to those at the US Fed, ECB policymakers are not ready to retire their argument that the current bout of high inflation is temporary. This reflects the significant difference in inflationary pressures between the two economies. Next week, we will get the detailed breakdown of November’s German inflation data, which will shed more light on the stronger-than-expected outturn. Meanwhile, with less than two weeks to go until December’s ECB meeting, the Governing Council appears to have reached a consensus on some aspects of its asset purchase programmes. But comments from Christine Lagarde today suggest that it will avoid making any long-term commitments.

3 December 2021

European Data Response

Euro-zone Retail Sales (Oct) & Final PMIs (Nov.)

Euro-zone retail sales have levelled off since June, but rising Covid cases and the return of restrictions are likely to weigh on sales and other components of consumption in the coming months.

3 December 2021

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

More from Jack Allen-Reynolds

European Data Response

Euro-zone Flash HICP (Aug.)

After rising to a near-10-year high of 3.0% in August, we suspect that euro-zone inflation will rise even further in the coming months. But this is due to temporary forces that should fade next year, leaving headline and core inflation well below 2% by the end of 2022.

31 August 2021

European Economics Update

Monetary Indicators Monitor (July)

Year-on-year money and lending growth has fallen sharply this year and we think it will decline further. With the subdued level of economic activity also weighing on consumer prices, we don’t think that money growth poses a significant upside risk to inflation.

26 August 2021

European Economics Update

Investment to make sizeable contribution to growth

Business surveys suggest that global supply problems are becoming a drag on euro-zone investment, but these problems should fade going into 2022. As long as the Delta variant doesn’t halt the economic recovery in its tracks, investment should make a sizeable contribution to GDP growth this year and next.

25 August 2021
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