Deutsche Bank: Eurozone growth momentum is losing steam

Analysts at Deutsche Bank notes that the pace of Eurozone’s growth momentum is deteriorating rapidly and as a result they are cutting their 2019 growth forecast to 0.9%.

Key Quotes

“Eurozone growth momentum is slowing rapidly. We cut our 2019 growth forecast further to 0.9% from 1.2%, the 3rd downward revision in the last 2m. Weak external demand is a key drag, compounded by concerns of cracks appearing in domestic resilience weakening job and capex indicators.”

“In January, German manufacturing PMI fell below 50 and we now expect Germany to contract again in Q1-19. Eurozone composite PMI for January fell for the fifth month in a row. Our SIREN Momentum index also continued to slide in Jan falling to its lowest level since later 2014.”

“Finally, our Eurozone trade cycle indicator also suggests drift towards recession. Risks are mainly on the downside. “No deal” Brexit, trade war escalation (auto tariffs by US) could tip euroarea economy into recession.”

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