Survey data for February suggest that euro-zone GDP growth accelerated in Q1 following two healthy quarterly gains of 0.4% in the second half of last year. After February’s rise, the PMI pointed to an expansion of about 0.6%. That said, there was evidence in January’s retail sales data that higher inflation is starting to damage spending – real sales fell for the third consecutive month, leaving the annual growth rate at a relatively subdued 1.2%. We expect this trend to continue, prompting overall GDP growth to slow in Q2 and beyond. But the strong start to the year has led us to revise up our 2017 euro-zone GDP growth forecast from 1.0% to 1.3%.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services