Author Archive

Light at the end of the Greek tunnel

Eight years after it first requested financial assistance from its European and international partners in April 2010, Greece has never been so close to a ‘clean exit’ from its bailout programme(s). The economy has shown more convincing signs of improvement, with real GDP recovering since mid-2016 and fall in unemployment accelerating in 2017. Macro imbalances […]

Euro area forecast to grow 2.3% in 2018

Taking account of stronger growth momentum, the carryover effect and upward revisions to past data, we have upgraded our euro area annual GDP growth forecasts to 2.3% both in 2017 and 2018. Our forecasts remain consistent with a very gradual slowdown in the quarterly pace of GDP growth, to 2% by end-2018. We view the […]

Euro area: solid growth, but inflation still under par

  According to preliminary Eurostat estimates, euro area real GDP increased by 0.6% q-o-q in Q3, slowing marginally from an upwardly-revised 0.7% in Q2. A breakdown by expenditure components will not be released until 14 November, but domestic demand was likely the key driver in the euro area’s solid momentum. At a country level, France […]

Broad-based rebound in euro area credit demand

The ECB’s October Bank Lending Survey (BLS) indicated that credit standards were broadly unchanged in Q3, while some modest easing was expected in Q4. The brightest spot is loan demand, which is expected to rebound for all types of loans moving forward. Net demand for bank loans to enterprises increased further in Q3, in line […]

Euroscepticism is making less of a splash

A Catalan crisis, a Dutch eurosceptic-leaning government coalition, the return of Austrian populists, difficult German coalition talks… Eurosceptics have had plenty of opportunities to make a comeback, and yet the market continues to trade each event as largely idiosyncratic in nature. Explanations abound for the resilience of peripheral markets to political risks, including a stronger […]

In spite of broadening growth, ECB will remain prudent

While the latest euro area GDP numbers were broadly in line with expectations, at 0.6% quarter-on-quarter in Q2, net revisions to past data pushed the GDP profile higher again. Once detailed estimates are published by Eurostat—and assuming there are no significant revisions to past data—we might revise our 2017 annual growth forecast for the euro […]

ECB: see you in autumn

At its July meeting, the ECB made no change in its monetary policy statement, as we expected. Importantly, the bias for QE extension “in terms of size and/or duration” was kept in the statement. ECB president Mario Draghi mentioned that the Governing Council (GC) was unanimous in communicating no change to forward guidance. Draghi reiterated […]

Rise in our growth forecast for the euro area

Euro area Q1 GDP growth was today revised up to 0.6% quarter on quarter, from 0.5% in the previous estimate. This revision reflects large adjustments in several countries, and mechanically pushes our annual growth forecasts higher. We now expect euro area real GDP to grow by 1.9% on average this year, after 1.7% in 2016 […]

Euro area growth on track to reach at least 1.5% in 2017

According to Eurostat’s preliminary flash estimate released today, euro area real GDP expanded by 0.5% q-o-q in Q1 2017 (+0.455% q-o-q; 1.8% q-o-q annualised; 1.7% y-o-y), slightly above consensus expectations (0.4%). This flash estimate confirms that most business confidence surveys overestimated growth at the beginning of the year, with the ‘true pace’ of economic expansion […]

Distorted rebound in core euro area inflation

The big story from today’s set of economic data releases was the sharp rebound of euro area core HICP inflation, from 0.7% to 1.2% in April. While the ECB should welcome the news, our analysis points to large statistical distortions which will likely be reversed in the months ahead. We expect euro area core HICP […]

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