Eurozone: An economy flirting with stimulus – ING

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In the view of analysts at ING, the marked slowdown in Eurozone GDP in the second quarter was broad-based and deepening industrial slump calls for more stimulus in the months ahead.

Key Quotes:

“The second estimate of GDP growth in the Eurozone confirmed the slowdown to 0.2% QoQ. Most countries saw a slowdown compared to Q1, which had been inflated by one-off factors. Germany clearly stood out with a contraction of -0.1%, but Italian output growth also stagnated in Q2.

Eurozone industrial production provided more evidence that industry is currently the economy’s Achilles heel. Production for the Eurozone as a whole plummeted by -1.6% in June. 

Today’s confirmation of a German contraction in the second quarter further ignites discussion about a possible broader downturn. With more downside risks down the line like Brexit, Italian political turmoil and trade war uncertainty, that debate seems to be legitimate.

The ECB has all but decided on a next stimulus package for September, but the question is whether governments are willing to provide additional support if downside risks were to materialize.” 

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