Virus restrictions weigh on Portugal’s recovery

The re-imposition of some restrictions in late-June is weighing heavily on Portugal’s tourism sector. Along with its unfavourable labour market structure and fragile banking system, this will hold back the recovery of consumption and investment. Portugal’s economy looks set to slump by less than Spain’s this year, but by more than the euro-zone average.
Melanie Debono Europe Economist
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European Economics Weekly

Energy, semi-conductors and Italy’s Green Pass

The continued high level of energy prices strengthens our view that euro-zone inflation will keep rising in the coming months. But by lowering consumers’ purchasing power, it could actually reduce inflationary pressure in the medium term. Meanwhile, data released this week added to the evidence that supply problems are weighing on German car manufacturers, and things are unlikely to get better any time soon. Finally, Italy’s new Green Pass requirement for workers came into force today, sparking protests at a number of ports. But so far the disruption seems to have been limited.

15 October 2021

European Data Response

Euro-zone Industrial Production (Aug)

The large decline in euro-zone industrial production in August was largely due to supply shortages affecting production, particularly in the German auto sector. While demand is still strong, prolonged supply shortages and high input prices suggest manufacturing will continue to struggle in Q4.

13 October 2021

European Economics Update

“Underlying inflation” still weak

Core inflation in the euro-zone rose to 1.9% in September, its highest level in nearly 13 years, but other measures of underlying inflation are much lower. This supports our view that when the temporary forces pushing up inflation have faded, the core rate will settle well below the ECB’s target.

12 October 2021

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European Data Response

ECB Bank Lending Survey (Q1 2021)

The Q1 ECB Bank Lending Survey revealed that the demand for bank credit fell in early 2021, and banks continued to tighten their lending standards as the pandemic dragged on and vaccine rollouts remained slow. This suggests lending growth will be weaker this year, which could hold back the recovery.

20 April 2021

Nordic & Swiss Data Response

Sweden Consumer Prices (Mar.)

Swedish inflation rose closer to the Riksbank’s 2% target in March, in line with expectations. As it should only breach the target temporarily, we continue to expect the Riksbank to keep the repo rate on hold for the foreseeable future.

14 April 2021

Nordic & Swiss Data Response

Norway Consumer Prices (Mar.)

The fact that core inflation in Norway came in above target for the fifteenth month in a row in March came as no surprise. However, it underlines that the Norges Bank is in a very different place to many of its peers, and is set to start raising interest rates later this year.

9 April 2021
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