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Sweden’s weak Q2 GDP growth rate is at odds with both the monthly economic data and the positive tone of recent surveys. As such, we suspect a decent rebound is on the cards for Q3. … Swedish fundamentals stronger than Q2 GDP data …
2nd August 2016
While France’s stagnation in the second quarter was partly down to temporary factors, we doubt that there will be a strong rebound in Q3. Indeed, we think that the underlying pace of growth has now slowed to not far above zero and fear that the situation …
1st August 2016
The latest EU bank stress tests confirm that, on the whole, the region’s banks are in a much healthier position than a few years ago. However, there are still significant problems in some countries’ banking sectors, most notably Italy’s. These issues will …
We think that the slowdown in euro-zone GDP growth in Q2 is a sign of things to come. While the UK’s vote to leave the EU won’t be a major drag on the euro-zone, we expect growth to slow further as the boosts from lower oil prices and the weaker euro …
29th July 2016
The “preliminary flash” estimate of euro-zone GDP confirmed the message from national data that the economy slowed in Q2. We think that this slowdown in growth is a sign of things to come. … Euro-zone Preliminary Flash GDP (Q2) & Flash CPI …
The first estimate of Sweden’s GDP in Q2 was much weaker than expected, and the release also revealed a downward revision to growth in what was an already-soft Q1. … Swedish GDP (Q2, 1st …
Italian banks are in trouble and there are no quick fixes for their problems. We think that policymakers will provide support to lenders this year, but this is unlikely to resolve banks’ underlying issue of low profitability in the context of Italy’s weak …
28th July 2016
July’s rise in German inflation further into positive territory is likely to be followed by continued increases in the coming months. But even in Germany, we do not think that inflation is on track to reach the ECB’s near-2% target on a sustained basis. … …
July’s rise in the euro-zone Economic Sentiment Indicator suggests that businesses and consumers have so far largely shrugged off the negative economic implications of the UK’s Brexit vote. … EC Business & Consumer Survey …
Recent news about Greece, including a planned return to bond issuance in 2017, may suggest that it is finally heading out of the woods. But we have been here before and with the debt burden still huge and the recession dragging on, the economy’s future in …
June’s data suggest that euro-zone money and credit growth are still too weak to provide much support to the economy. While the full effects of ECB stimulus introduced in June are yet to be felt, we think that credit growth will remain weak. … Euro-zone …
27th July 2016
The first estimate of Sweden’s GDP in Q2 was much weaker than expected, and the release also revealed a downward revision to growth in what was an already-soft Q1. … Swedish GDP (Q2 16, 1st …
A weaker outlook for the external sector on the back of the UK’s Brexit vote will hit Belgium’s open economy harder than most. And with consumers looking poorly placed to take up the slack, the economy will struggle to grow by much more than 1% this year …
26th July 2016
July’s Ifo survey supported the message from the PMI that German economic activity has not yet suffered from the UK’s Brexit vote. But the dip in businesses’ expectations may suggest that a slowdown is to come. … German Ifo Survey …
25th July 2016
Last week’s euro-zone and country level data releases started to lift some of the heavy fog on the initial impact of the UK’s vote to leave the EU on the currency union’s economy. The early signs are somewhat mixed, but provide some reassurance. … Early …
22nd July 2016
July’s slight fall in the euro-zone Composite PMI suggests that the real economy has generally shrugged off the financial market volatility that followed the UK’s Brexit vote, but remains sluggish. … Euro-zone Flash PMIs …
After leaving policy on hold today, the ECB also stopped short of promising imminent policy easing. But President Draghi reiterated that the Bank is ready to act and we believe that it will up the pace of asset purchases and possibly cut interest rates at …
21st July 2016
The Riksbank minutes confirm a readiness to act if conditions deteriorate in the wake of the UK’s Brexit vote. But there are signs of diminishing appetite for further measures from some members. … Riksbank finds positives despite Brexit …
19th July 2016
July’s German ZEW Survey, which was conducted over the past two weeks, suggests that investors are more worried about the effects of Brexit on the German economy than the financial market response has so far implied. … German ZEW Survey (Jul.) & E-Z Bank …
The ECB is set to loosen policy in the coming months. But there is a limit to how much more monetary policy alone can do for growth. In the wake of the UK’s Brexit vote, Mario Draghi’s calls for fiscal support are thus set to grow. Unfortunately, …
15th July 2016
May’s euro-zone goods trade data suggest that net exports will have cushioned the likely slowdown in GDP growth in Q2. Further ahead, we expect the trade surplus to narrow further this year, as slower growth in foreign demand weighs on exports. … …
The UK’s vote to leave the EU has weakened the outlook for the European Economy. Admittedly, the financial market reaction has been muted and we think that the UK will ultimately fare well outside the EU. But there will be a near-term hit to UK demand, …
14th July 2016
The European Central Bank (ECB) may refrain from loosening policy this month following the Bank of England’s inaction. But the Brexit vote has increased what were already significant downside risks to the euro-zone economy and the inflation outlook …
With the exception of the automobile and agricultural industries, WTO tariffs are low enough to imply that even if no trade deal is reached, Brexit will do little direct damage to euro-zone exporters. And given the benefits for both sides, it seems likely …
May’s fall in euro-zone industrial production reversed almost all of April’s strong gain and suggests that industry will probably detract from euro-zone GDP growth in Q2. … Euro-zone Industrial Production …
13th July 2016
Looking through the massive distortions in the Irish GDP data, today’s Q1 release suggests that the economy has continued to perform well. … Ireland GDP …
Swedish inflation hit a four-year high in June, but it is still low. So although domestic price pressures are rising, the Riksbank may still have to take further policy action. … Swedish Consumer Prices …
12th July 2016
The Riksbank minutes confirm a readiness to act if conditions deteriorate in the wake of the UK’s Brexit vote. But there are signs of diminishing appetite for further measures from some members. … Swedish Consumer Prices (June …
The Dutch economy is more vulnerable than most to a downturn in the UK. In turn, the negative labour market impact could boost support for eurosceptic parties ahead of next year’s elections. … The Netherlands will be hit harder than most by …
11th July 2016
There is no easy solution to the euro-zone’s banking problems, but the risks of doing nothing are too large for policymakers to simply sit on their hands. We think that policymakers will find a way to support the banks. And the forthcoming ECB stress test …
8th July 2016
May’s decline in French industrial production only partly reversed April’s gain but combined with falls elsewhere leaves euro-zone industry looking weak. And Germany’s trade balance fell from its previous record high due to a drop in exports. … French …
May’s sharp fall in German industrial production adds to the evidence that GDPgrowth in the region’s largest economy slowed sharply in Q2. And the recoverylooks likely to ease further in the second half of the year. … German Industrial Production …
7th July 2016
June’s survey data confirmed that GDP growth in Q2 is very unlikely to have matched Q1’s 0.6% quarterly expansion, with both the EC Survey and the PMI appearing consistent with around a 0.3% rise. Industrial production and retail sales data have supported …
6th July 2016
Sweden’s Riksbank has pushed back its expectations for a rate rise. Although the negative impact of previous falls in energy prices on inflation is fading and domestic inflationary pressures are picking up, the Riksbank might still need to intervene in …
May’s euro-zone retail sales data point to a slowdown in consumer spending growth, and thus GDP growth, in Q2. And despite a small upward revision from the flash release, June’s Composite PMI also suggests that growth will slow. … Euro-zone Retail Sales …
5th July 2016
While German exporters are particularly vulnerable to weaker demand from the UK following the Brexit vote, the economy is also well-placed to benefit from any relocation of financial services or foreign direct investment and less at risk of a drop in …
Portugal and Greece seem have made some good headway towards repairing their public finances so far this year, in contrast with Italy and Spain which are both struggling to make any improvement. Meanwhile, periphery bond markets are so far weathering …
4th July 2016
On the face of it, Germany seems more exposed than France to the effects of the UK leaving the EU. But in the time before the UK actually leaves the single market, France is more vulnerable than Germany to a downturn in sentiment arising from growing …
1st July 2016
May’s fall in euro-zone unemployment shows that the labour market is slowly recovering. But employment growth may already have peaked and there is still too much slack to generate any meaningful wage growth or inflationary pressure. … Euro-zone …
Recent market movements point to a downturn in euro-zone growth, particularly in the periphery. The ECB is likely to respond by loosening monetary policy, but it cannot solve all of the euro-zone’s ills. … Market moves could destabilise the euro-zone …
30th June 2016
June’s rise in euro-zone CPI inflation into positive territory might mark the start of an upward trend, but we see little hope of inflation hitting the ECB’s target over the medium term. … Euro-zone Flash CPI (Jun.) & German Retail Sales …
Italian opposition to the EU is strong and several forces could cause that hostility to grow. October’s constitutional reform referendum will provide voters with an opportunity to oust the prime minister, potentially leading to a general election in which …
29th June 2016
June’s increase in German inflation back into positive territory may well mark the start of an upward trend. But even in Germany, we do not think that inflation is on track to reach the ECB’s near 2% target on a sustained basis. … German Flash CPI …
June’s fall in euro-zone business and consumer confidence suggests that the euro-zone economy was slowing even before the UK voted to leave the EU. … EC Business & Consumer Survey …
While the UK’s vote for Brexit will have only a small direct effect on euro-zone trade this year and next, the indirect effects on confidence and financial markets may be more serious. We have maintained our downbeat forecast of 1.2% GDP growth this …
27th June 2016
Despite unexpected gains for the right in Spain, an anti-austerity left-wing coalition may now be more likely than opinion polls had suggested. Either way, the new government will be a very fragile one. … Spain’s new government set to be a fragile …
May’s euro-zone monetary data suggest that economic growth remains fairly slow. While the ECB has since introduced new stimulus measures, including its latest TLTROs, we doubt that they will boost money and lending growth significantly. … Euro-zone …
The UK’s vote to leave the EU has been followed by calls for referendums in other countries. And , notably, euro-scepticism in some countries seems to be even stronger than in the UK. … Which country might be next to hold an EU …
24th June 2016
