Krishen Rangasamy, analyst at National Bank Financial, points out that the Eurozone witnessed its worst semester in five years with real GDP growth likely coming in at less than 1% annualized in the second half of 2018, the weakest since 2013.
Key Quotes
“While 2018Q4 GDP results are not yet available, odds are they won’t be pretty in light of latest data from Germany’s Federal Statistics Office ─ the 1.5% growth print for 2018 points to a soft Q4 for the zone’s largest economy ─, and disruptions to France’s economic activity last quarter due to “yellow vest” protests.”
“The zone’s industrial production seems to have contracted on a year-on-year basis in the final quarter of 2018. The last two times this happened (2008 and 2012), the common currency area eventually fell into recession. Does this latest blotch of red ink on industrial output mean the Eurozone is headed for yet another recession?”
“That possibility cannot be ruled out especially if the deceleration of global trade extends into 2019, social unrest in places such as France and Italy gather momentum and/or Brexit spirals into something worse. But if those can be avoided, the zone has potential to bounce back.”
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