Eurozone: A more upbeat outlook, but still surrounded by (mostly political) risks - BBVA
|Research Team at BBVA note that improving confidence across sectors and major countries continued at the start of 2017 while growth momentum seems to take root in 1Q17, driven mostly by improved global demand and a weak euro…
Key quotes:
• … but hard data up to February such as industrial output and retail sales begin to moderate, though foreign trade clearly improves
• Our MICA-BBVA model for short-term growth estimates a quarterly GDP figure in the eurozone of 0.5% QoQ in 1Q17
• Growth forecasts for 2017-18 are revised slightly upwards to 1.7% (+0.1pp) in both years, driven by improving global demand. Domestic drivers remain broadly unchanged, as well as the accommodative monetary stance and non-restrictive fiscal measures in the pipeline for the eurozone as a whole
• Germany and Spain will continue to perform better than France and Italy over the forecast horizon, but there is some tendency to convergence
• Inflation pressures are still subdued. Headline inflation is expected to be higher in 2017 (+0.2pp to 1.8%) but still below 2% in 2018 (1.6%) as energy price inflation fades. Core inflation remains stable slightly below 1% and is expected to increase gradually to around 1.5% by the end of the forecast horizon • Despite the improvement in both global and European outlook, risks to growth remain tilted to the downside, mainly due to domestic political issues (2017) and to China’s pending adjustment (in the long term)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.