Filtered by Subscriptions: Europe Economics Use setting Europe Economics
January’s surveys suggest that growth has slowed sharply in both Switzerland and Sweden. The SNB will see this as supporting its ultra-accommodative policy. But for the Riksbank it creates downside risks to its forecast for a rate hike in the second half …
30th January 2019
Problems in the auto industry explain most of the slowdown in euro-zone GDP growth in Q3 last year. But in Q4, although car production remained weak, it did not fall further, and it will not have subtracted from GDP growth. Other factors lie behind the …
29th January 2019
The turn towards a slightly more dovish tone by the ECB at its meeting on Thursday will have made policymakers at the SNB and the Riksbank even more hesitant to hike rates anytime soon. Next week, we expect economic sentiment indicators for Switzerland, …
25th January 2019
The latest batch of business surveys suggest that the euro-zone economy may be stalling rather than just slowing. We think the ECB will tweak its forward guidance in March, and will at least consider more radical options soon. Meanwhile, we’re braced for …
January’s further fall in the Ifo Business Climate Index supports other evidence that economic growth in Germany has stalled. … German Ifo Survey …
Following today’s ECB press conference, we think that the Bank will soon change its forward guidance to make it clear that it won’t raise interest rates until 2020 at the earliest. We also suspect that it will unveil a new round of TLTROs before long. … …
24th January 2019
The further fall in the Composite PMI for the euro-zone in January will not prompt the ECB to change its statement this afternoon. But it will heighten concerns about the severity of the slowdown and makes it even more likely that policymakers will leave …
Following today’s monetary policy announcement, the Norges Bank is almost certain to raise interest rates in March. But we think that it is still too optimistic about prospects for the economy this year and, as a result, its tightening cycle will be much …
The slowdown in the euro-zone economy last year was driven partly by a decline in export growth and partly by weakening household consumption growth. This year, we suspect that consumption growth will edge up but exports and investment will lose pace, …
23rd January 2019
Whoever becomes the next ECB President is likely to be more “hawkish”, and perhaps less effective, than Mario Draghi. That may not matter if the economy recovers from its recent soft patch, allowing the ECB to normalise monetary policy; but it could be a …
22nd January 2019
The latest ECB Bank Lending Survey shows that consumers’ and firms’ demand for credit is softening, adding to the evidence that the euro-zone economy has lost momentum. … ECB Bank Lending Survey (Q4 …
We expect GDP growth in Switzerland and across the Nordics to slow this year and next. As a result, price pressures should generally remain subdued and central banks look set to raise interest rates very gradually. We think that the Norges Bank and …
21st January 2019
This week saw more evidence that the euro-zone economy has lost a lot of momentum. Meanwhile, the UK parliament rejected the EU Withdrawal Agreement, once again raising the spectre of a no deal Brexit. And in Greece, Prime Minister Alexis Tsipras narrowly …
18th January 2019
Sweden’s new government has agreed to cut income taxes and relax labour laws. It has also brought an end to four months of political uncertainty, at least for now. But we suspect that all this will have little impact on the economy. … Swedish fiscal boost …
The euro-zone should regain some momentum in the coming months, at least compared to its dire performance at the end of last year. But we think the economy will expand by just 1% in 2019 as a whole. Demand in key export partners is set to slow further, …
The latest manufacturing PMIs add to the evidence that economic growth in Switzerland and Sweden will continue to slow. The Swiss index is consistent with annual growth in industrial production of about 3%, compared to almost 8% at the end of 2017. And …
At next week’s monetary policy meeting, the Governing Council of the ECB will have little option but to acknowledge that the downside risks to its forecasts have increased further since it last met in December. Having tweaked its forward guidance only …
17th January 2019
At its meeting on 24th January, the Norges Bank is likely to reiterate that it expects to raise interest rates in March, taking the key policy rate to 1.0%. But we think that its tightening cycle will be much slower than its forecasts imply. Meanwhile, at …
In a busy election calendar this year, the focus will be on the rise of populist and euro-sceptic parties. Elections for the European Parliament in May are the most high profile event, but there will also be national elections in Belgium, Portugal, Greece …
The euro-zone has shifted down a gear but has not (yet) gone into reverse. Italy probably experienced a technical recession last year and Germany only narrowly avoided one. More importantly, the breadth of the downturn, which affected all major countries …
16th January 2019
The preliminary estimate of GDP for 2018, and comments by the Federal Statistics Office, suggest that Germany narrowly avoided a recession last year. But this is of limited comfort: the bigger picture is that, having slowed sharply last year, Germany’s …
15th January 2019
The broad-based slump in industrial production in November underlines how serious the malaise is in Europe’s industrial sector. While the euro-zone may have eked out a small increase in GDP in Q4, it has clearly shifted down a gear. And there is little …
14th January 2019
Sharp falls in industrial production in November last year mean that Germany and Italy may have experienced technical recessions in 2018. And GDP in the euro-zone as a whole probably increased by only around 0.2% in Q4. Meanwhile, officials at the ECB are …
11th January 2019
Recent developments suggest that both the Riksbank and Norges Bank will tightening monetary policy more slowly than we had previously anticipated. This is partly because we have revised down our forecasts for economic growth in the euro-zone. But there …
The account of the ECB’s last meeting confirms that the Governing Council was less confident about the economic outlook, even in mid-December. While policy loosening is very unlikely for now, the account implies that if further support were needed, the …
10th January 2019
December’s stronger-than-expected inflation data for Norway suggest that the Norges Bank is almost certain to follow through with its plan to raise interest rates in March. But we think it will then wait until 2020 before raising rates again, which would …
We are revising our forecasts for economic growth in the euro-zone and now expect GDP to increase by only 1% this year and a bit less in 2020. Core inflation is also likely to be around 1% this year and, as a result, the ECB will probably leave rates on …
9th January 2019
The drop in headline inflation in Switzerland in December is a sign of things to come, as inflation is set to fall to just above zero in the coming months. Meanwhile, the minutes of the Riksbank’s December meeting suggest that it is likely to hike at most …
Following on from the disappointing German industrial production data released earlier today, the drop in the EC’s Economic Sentiment Indicator (ESI) for December is yet another sign that there was a broad-based loss of momentum in the euro-zone towards …
8th January 2019
November’s decline in German industrial production adds to the evidence that the euro-zone’s largest economy grew at a meagre pace in Q4. … German Industrial Production …
PMIs for December pointed to robust growth in Q4 in Switzerland, Sweden, Norway and Denmark. However, the breakdowns pointed to weak growth ahead in Switzerland and Sweden, and only the Danish economy is set to perform especially well in 2019. … PMIs …
4th January 2019
Data released this week suggest that the economy lost more momentum at the end of last year and that GDP growth in 2019 won’t be as good as in 2018. … Euro-zone economy continues to lose …
Data released this morning add to the evidence that economic growth in the currency union has shifted down a gear and, with underlying inflation still low, it now looks likely that the ECB will wait much longer before raising interest rates than its …
The Riksbank’s decision to hike interest rates this week supported our long-held view that it would tighten policy more aggressively than investors anticipate. But the risks from high household debt and weak construction output are mounting. Meanwhile, …
21st December 2018
This week, Italy’s Government again showed itself to be more flexible than many had anticipated. But its fiscal problems are far from over and, in our view, public debt still looks unsustainable in the long run. Meanwhile, data released this week added to …
The Riksbank’s surprise decision to hike interest rates today supported our long-held call that it would tighten policy more aggressively than investors anticipate. But there is a clear risk that a housing-related economic slowdown could leave the Bank …
20th December 2018
As oil prices have fallen over the past few months, investors’ expectations for interest rates in Norway have fallen roughly into line with our own. Rate expectations in Switzerland have edged down too, reflecting the weakness of the latest economic data. …
18th December 2018
While business surveys have weakened throughout the euro-zone, they imply quite different things for growth in each economy. The Spanish surveys still bode well. But the German and French indicators are consistent with very slow growth while the Italian …
December’s fall in the Ifo Business Climate Indicator (BCI) to a twenty-seven month low adds to evidence that the slowdown in Germany is more than just a soft patch. … German Ifo Survey …
Following this week’s ECB meeting, and the latest data on economic growth in the currency union, the chance that the Bank raises interest rates next year has fallen. … ECB dovish as PMI confirms growth …
14th December 2018
Central bank meetings in Norway and Iceland this week suggested that interest rate hikes are on the horizon in both economies. By contrast, the Swiss National Bank again signalled that it won’t raise rates anytime soon. Next week we expect the Riksbank to …
December’s fall in the euro-zone Composite PMI was almost entirely driven by a sharp drop in France, perhaps suggesting that the ‘gilets jaunes’ protests have had a serious economic effect. But even if France’s PMI bounces back as the effects of the …
While the ECB has ended its net asset purchases, it plans to reinvest funds from maturing securities for a long time to come and has stressed that any future rate hikes will depend on a build-up of inflationary pressure. We are still pencilling in a first …
13th December 2018
Italy’s government has agreed to reduce its budget deficit forecast for next year, which reduces the risk of a crisis in the near term. But this does not spell the end of its fiscal troubles. With the country’s economic prospects bleak, government debt …
In today’s statement, the Norges Bank clearly signalled that an interest rate hike in March is a near certainty. But beyond that, we think that lower oil prices will prompt the Bank to end its tightening cycle sooner than investors expect, causing the …
The Swiss National Bank reiterated its commitment to its ultra-accommodative policy stance today and revised down its forecasts for inflation and GDP. As we think inflation will be even lower than they forecast, we continue to expect the SNB to keep its …
The euro-zone economy’s recent performance has been worse than we or the consensus expected. But for now at least, it seems to be a garden variety slowdown rather than something more worrying. The exception is Italy, where the risk of stagnation or even a …
12th December 2018
October’s small rise in euro-zone industrial production provides some grounds for optimism that GDP growth will pick up a bit in Q4. But the big picture is that the euro-zone economy has lost momentum, increasing the chance that the ECB waits longer …
The Central Bank of Iceland left interest rates unchanged today, but hinted strongly that hikes are on the horizon. We think that it will raise interest rates twice next year, leaving the deposit rate at 5.00%. … Central Bank of Iceland tightening cycle …
The slight drop in core inflation in November further decreases the chances of the Riksbank raising rates next week. Nonetheless, we still expect the first hike in February as underlying inflation is set to rebound. … Swedish Consumer Prices …
