Nick Kounis, head of financial markets research at ABN AMRO, points out that they have made downward revisions to their Eurozone GDP forecast for 2019 to 0.8% from 1.1% previously.

Key Quotes

“Our projection is for a growth rate less than half of the ECB’s current forecast. The change stems from the recent and ongoing weakness in Eurozone and global economic data that suggest the period of weaker economic growth will be more protracted.”

“The weakness in global trade and production looks set to persist as the tightening of global financial conditions that we saw last year will continue to feed through. The downturn in eurozone exports is also leading to a slowdown in fixed investment growth.”

“The economy will probably see sub-trend growth rates in the first half of this year, before a return to trend rates in the second half of the year. This is based on the relative resilience of domestic demand combined with an improvement in the global economy.”

“Domestic demand should be underpinned by easy financial conditions, lower headline inflation and some fiscal stimulus. The improvement in global growth should be supported by the dovish shift by global central banks, which is arresting the tightening of financial conditions. However, central banks have are far from stepping on the gas, so we do not expect a sharp recovery in global growth.”

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