Eurozone Economic Forecast

Eurozone Economic Outlook

September 25, 2018

Comprehensive data showed slower, but stable, growth in the Eurozone throughout the first half of the year, with second-quarter growth confirmed at a seasonally-adjusted 0.4% quarter-on-quarter. Internally, dynamics were uneven; higher inflation and weaker economic sentiment weighed on household spending, while easy credit conditions supported an upturn in fixed investment. As feared, external-sector dynamics dragged on growth as exports continued to underwhelm amid this year’s slump of global trade. Analysts expect a similar outturn for the third quarter, although available data has been noticeably weaker in recent months. In line with falling consumer sentiment, retail sales continued moderating through July. Meanwhile, lower composite PMI readings and waning industrial metrics point to slack in the economy that could be exacerbated by the pullback in global demand and uncertainty over the Eurozone’s trade relationship with the United States. In late September, the prospect of a chaotic, no-deal Brexit grew following an informal summit in Austria, in which a number of the UK’s proposals were dismissed by the bloc’s leaders as unworkable.

Eurozone Economic Growth

A lower cruising speed is expected next year as moderate wage growth and slower employment gains run up against higher inflation. That said, the outlook for investment looks bright amid the prospect of still-accommodative interest rates. Meanwhile, geopolitical uncertainties are expected to keep weighing on external trade and the firming of the euro is seen hitting exports. Met the why particular panelists project growth of 2.1% in 2018 and 1.8% in 2019, unchanged from last month’s forecast.

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Eurozone Facts

Exchange Rate1.150.65 %Oct 18
Stock Market1,114-0.52 %Oct 18

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