Despite Italy, global outlook remains positive – Wells Fargo

Outside of Italy, a slew of countries reported Q1 real GDP growth during the week.   Economic growth in Sweden, Switzerland and India topped expectations, while Canadian growth was a bit softer than expected but it is not expected to continue slowing, explained analysts at Wells Fargo.

Key Quotes:

“Outside of Italy, a slew of countries reported first quarter GDP this past week. Starting with our neighbors to the north, Canadian GDP growth slowed to a 1.3 percent annualized pace in Q1, a continuation of the slowdown that began in H2-2017 (…)   We do not expect the Canadian economy to continue slowing, and it appears the Bank of Canada (BoC) is in agreement.”

“India‘s economy accelerated for the third consecutive quarter, rising 7.7 percent year over year. The data were supportive of our view that India’s economy has turned the corner after an economic slowdown driven by structural reforms surrounding demonetization and the rollout of the goods and services tax.”

“The Swiss economy strengthened further in Q1, with real GDP growing 2.2 percent year over year to surpass 2 percent for the first time since Q2-2016. The Swiss National Bank (SNB) probably does not want to get materially ahead of the European Central Bank’s (ECB) monetary policy, and we look for the ECB to tighten at a gradual pace.”

“Swedish GDP also surprised to the upside. With the gain, real GDP growth in Sweden continued its slow but steady climb higher on a year-over-year basis, eclipsing the 3 percent mark for the first time in nearly two years.”

“Eurozone inflation, which had softened over the past few months, showed some signs of a turnaround in May . Decelerating prices and softer economic growth in Q1 led some to wonder whether the European Central Bank would really end its asset purchases by year’s end.”