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Protectionism vs free trade

European economy 22nd December 2020

Eurozone Trade Surplus Grows By 10.3% In October To €30 Bn

The positive trend in the euro area trade balance increased in October by 10.3% year-on-year, reaching 30 billion euros, according to data on international trade in goods published by Eurostat. By items, exports of goods from the euro area to the rest of the world contracted by 9%, to 199.3 billion euros. The fall was offset by a sharper decline in exports, which fell by 11.7%, to 169.3 billion euros. Commercial activity amongst the euro members fell by 6.8% in the tenth month of the year, to 166.1 billion euros.

EZforecastok

European economy 10th December 2020

Eurozone-2020 Not Ending Fast Enough

Apolline Menut (AXA IM) | For Eurozone economies, 2020 cannot end soon enough. After a 15.1% decline in the first half of the year and a strong, but partial, rebound in the Q3, the euro area economy is set to contract again in Q4 (-4.1%qoq). The autumn lockdowns triggered by the pandemic’s second wave are less restrictive than in the spring (schools, the public sector and industry remain open this time), and so is our assumption of activity hit (-10% in November on average for the euro area versus around -25% in April). But the euro area will finish the year 8.3 percentage points (ppt) below end-2019 levels and with large dispersion across countries. Virus developments, stringency of restrictions, exposures to the most affected sectors (Exhibit 1) and fiscal supports vary across countries. For that reason, we see German growth shrinking by “only” 6%yoy in 2020, half of the contraction we expect in Spain, and much better than the 7.7% decline we project for the euro area as a whole.

euro espana

Spanish economy 30th October 2020

The Eurozone Grows At A Pace Never Seen Before: So Does Spain, But There Is Nothing To Celebrate

The Eurozone economy grew by record high of 12.7% in the third quarter with expansion including the four major countries: Germany by 8.2%, France by 18.2%, Italy by 16.1% and Spain by 16.7%. This rebound reflected the largest increase since statistics started being kept in 1995. Specifically, Spanish historical GDP’s followed a plunge of almost 18% in the previous three months. However, these figures has a sort of bittersweet taste as they coincide with the reintroduction of strict containment measures across the region which are likely to make the expected recovery reverse.

negative rates2

European economy 26th October 2020

Deflation, The Greatest Threat For The Eurozone In The Short Term

Philippe Waetcher (Natixis AM) | The low inflation observed in the euro zone will translate into very weak wage dynamics. Demand will be weak while health constraints will weigh on activity. A situation that will not make it possible to fix on medium-term prospects compatible with the recovery plans. Inflation is the answer. The government on this point has more power than the central banks.

BCE exterior

European economy 29th July 2020

ECB Tests Found That Eurozone Banks Are Able To Withstand The Stress Caused By The Pandemic

Santander Corporate & Investment | The ECB published on Tuesday the aggregate results of its vulnerability analysis of the 86 banks directly supervised under the Single Supervisory Mechanism. This shows that “the euro area banking sector can withstand the stress induced by the pandemic but, if the situation worsens, the decline in bank capital would be significant. Furthermore, the ECB has extended its recommendation that banks should not distribute dividends until 2021.

Eurozone with masks

European economy 15th July 2020

Europe Is Gaining Ground: Eurozone’s Activity Reaches 92% Of Pre-Crisis Level; The US Stagnates At 67%

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.

sector auto spain

European economy 14th July 2020

Eurozone Industrial Production Rebounded 12.4% In May With The End Of Restrictions

Industrial production in the euro area chalked up a record rise of 12.4% in May, after falls of 18.2% in April and 11.8% in March. However, the figure was still 20.9% below the level recorded in May 2019, according to data published by the EU’s statistics office Eurostat. In the case of Spain, industrial production rebounded 15.1% in May after declines of 22.8% in April and 13.5% in March. The figure was still 24.9% lower than in May 2019.

bank antonviolin sstock

European economy 22nd June 2020

The Appeal Of Investing In Banks Is Very Strong: Expectations For Revaluation Are Close To 100% In A 1-2 Year Period

Ofelia Marín-Lozano (1962 Capital SICAV) | The starting point is much more solid than in 2008, when the banks emerged from many years of double-digit credit expansion and high rates. In addition, European banks have significantly improved their equity base, which is double, or even almost triple, the levels reached a decade ago in all their solvency ratios. The ratio of higher quality capital to risk-weighted assets, (CET1 or common equity tier 1) has risen from levels below 6% in 2011 to over 14% today. 

Retail Eurozone

European economy 5th June 2020

Quarantine Drives Eurozone’s Retail Sales To Record Lows

Bankia Estudios | Retail sales again recorded a sharp decline in April (11.7% vs 11.1%), driven down to an all-time low. By items, the rise in online sales stands out, showing a significant increase (10.9% vs. 0.7%), pointing to a change in the pattern of consumer behaviour. This could, in part, be consolidated in the medium term, although it is too early to draw conclusions. The rest of the items recorded sharp falls, although of lesser intensity than in March.