Eurozone: Nowcasts show growth momentum is nowhere to be found
Lacklustre eurozone growth momentum looks unlikely to meaningfully pick up before the end of the year. Our GDP nowcasting models for Q3, which includes a one-off boost from the Paris Olympics, point to modest growth at 0.3% q/q – in line with our baseline
What you will learn:
- Hopes of a swift consumer rebound have not materialised, despite growth in real earnings resuming and a resilient labour market. We previously warned about consumers’ reluctance to spend income gains immediately in the high rates environment – this risk is materialising.
- Industry remains the main weak spot, with little prospect for near-term respite. High interest rates home and abroad are weighing on demand, while high energy costs are still denting competitiveness. We think the sector has further to go before bottoming out.
- Monetary policy normalisation is the key to improved growth, and weak activity favours more front-loaded cuts. However, given transmission lags, this won’t deliver a boost before H2 2025. The main downside risk to our outlook is a sharper labour market deterioration; the main upside risk is stronger consumer propensity to spend income and wealth gains.
Tags:
Related Services
Post
A lacklustre recovery for the Eurozone’s lukewarm economy
We expect stronger activity in the eurozone in 2025, but growth will remain lacklustre as the consumer recovery lacks momentum. Monetary policy will become less restrictive, but fiscal policy will continue to drag on growth. External demand is set to improve, but prospects are prone to risks from rising protectionism. We anticipate GDP growth of 1.3% in 2025, slightly below consensus.
Find Out More
Post
European struggles are slowing the global industrial upturn
Europe’s industrial recession continues to take its toll: the EU's industrial output expected to shrink by 0.7% in 2024, a significant downgrade from our previous forecast of 0.1% growth,
Find Out More
Post
Claims of deindustrialisation in Europe are overblown
Our forecasts do not show any significant deindustrialisation over the next decades in Europe. However, Europe indeed faces substantial challenges that will impact low-skilled, upstream, energy-intensive and easily tradable sectors.
Find Out More