Eurozone: A tough start, but not a recession - Danske Bank
|Analysts from Danske Bank, explained that macro data points to a tough start for the Eurozone economy in 2019. Still, their recession tracker is not yet in recessionary territory.
Key Quotes:
“Q4 18 GDP growth of 0.2% q/q confirmed a lacklustre finish to 2018 and macro data continues to point to a tough start for the euro area economy in 2019 . PMIs eased further in January to the lowest level since 2014, but this masks somewhat diverging country trends: while German business expectations fell sharply across sectors and Italy officially plunged into recession, we are seeing tentative signs of stabilisation in France and Spain. That said, so far leading indicators still point to a further decrease in the quarterly euro area growth pace to just 0.1% q/q in Q1 19.”
“ECB finally acknowledged weaker incoming data and persistent global uncertainties and changed its growth risk assessment to the downside. But as policymakers were in 'assessing mode' rather than 'policy mode', we will have to wait until the March meeting to hear what the continued growth disappointments imply for monetary policy-setting.”
“Amid the dismal Eurozone cocktail, euro recession fears have grabbed markets while analysts continue to cut their 2019 growth estimates. So are we heading for a euro area recession? We still do not think so. Our Danske recession tracker has continuously edged down over the past year - in line with the slowdown in the growth momentum we have observed - but at -0.4 clearly remains outside of recessionary territory.”
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