David Kohl (Chief Economist Germany, Julius Baer) | Lower new infection rates in Europe and a swifter recovery of activity are valid reasons to scale back some pessimism regarding the eurozone growth outlook. The eurozone has ramped up its fiscal response to the corona pandemic. We feel comfortable in expecting for the region a more moderate contraction of -7.2% in 2020.
The market has already discounted that the ECB will announce new stimulus measures on December 3rd, modifying the current debt purchasing programme. But monetary policy only goes so far, and apart from the central bank’s measures, the Eurozone needs more public and private investment to recover its growth potential.
Despite the political challenges emerging in Greece, the economic recovery in the eurozone has begun to strengthen driven by domestic consumption.
The Corner | June 23, 2015 | Despite the Greek drama, the eurozone’s economy is picking up. Eurozone composite PMI jumped to 49-month high of 54.1 in June, according to research firm Markit.
LONDON | By Víctor Jiménez | Raise the main interest rate? Certainly not. Or not yet, anyway. While the US economy is not showing clear signs of having overcome the assisted breathing phase (i.e. printing money or the recently wound up phase of quantitative easing that the Fed finished two weeks ago), the chances are that the Bank of England will keep the price of the pound at a very low level.
MADRID | The Corner | Loans to the private sector in the euro area fell by 1.2% year-on-year in September, according to the ECB’s data, a slower rate than the 1.5% decline seen in August. Are there reasons for optimism? It depends. “After seven years of crisis, bank loans continue to fall. Those to the private sector have fallen by -0.6% yoy. Loans to non-financial businesses dropped by -1.8%, with Spain and Ireland especially weak,” Barclay’s Alberto Vigil pointed out. “Now if you want to look through a different glass (loans’ reduction is slowing down), the opposite interpretation is also perfectly correct,” he added.
MADRID | The Corner | Weak loan growth continues in Europe, although there are signs of recovery in corporate lending in France, Italy, UK, Sweden and Belgium. Bank lending surveys point to improving mortgage demand in Italy and Spain; but some deterioration in the UK. For Corporates, banks are reporting some increase in expected corporate loan demand into the year end, most notably in France and Spain, Barclays analysts commented on Friday.
LONDON | By Victor Jimenez | “The improvement in the PMIs suggest the Eurozone economy should exit recession in the third quarter of this year. But the recovery is likely to remain uneven.”