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Euro-zone Industrial Production (Mar.)

The decline in industrial output in March shows that the war in Ukraine is having a severe impact on manufacturers. With further Russian energy import bans looming and supply shortages remaining acute, we think this is the start of a manufacturing recession which will cause GDP to stagnate.
Michael Tran Assistant Economist
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European Economics Focus

Euro-zone core inflation will remain higher for longer

We are revising up our forecast for core inflation in the euro-zone because the labour market is tighter, demand stronger and inflation expectations higher than we had anticipated. Moreover, fiscal policy will be tightened only gradually and there are significant upside risks to commodity prices. We think the core rate will remain above 2% during 2023-2024, keeping pressure on the ECB to tighten policy.

27 June 2022

European Economics Weekly

US recession fears won’t deter ECB

Fears about a possible US recession have prompted investors to revise their ECB interest rate expectations down this week, but we have pushed ours up to show the deposit rate peaking at 2%. While next week we expect the euro-zone economic sentiment indicator to add to the evidence that growth slowed in June, we think that policymakers at the central bank will be more concerned by the inflation data, which look set to reach a new record high.

24 June 2022

European Data Response

German Ifo Survey (Jun.)

The renewed decline in the German Ifo Business Climate Index for June provides further evidence that weaker demand is starting to affect manufacturing output. With inflation set to remain high and the country’s gas supply looking increasingly precarious, the chances of the country falling into recession this year have risen considerably.

24 June 2022

More from Michael Tran

Nordic & Swiss Data Response

Sweden Consumer Prices (Apr.)

The stronger-than-expected increase in Swedish inflation in April was partly due to high energy and food prices but also because of broadening price pressures. We expect the core rate to remain above the Riksbank’s target for some time, which will prompt it to continue hiking interest rates.

12 May 2022

European Data Response

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.

4 May 2022

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
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