Analysts at Natixis point out that the widespread pessimism over the Eurozone’s growth looks excessive.
Key Quotes:
“In the recent period, the OECD and the ECB have become highly pessimistic over growth in the euro zone in 2019 (with growth forecasts of 1% and 1.1%, respectively), citing contrived arguments such as the trade war. To be sure, a global cyclical slowdown in industry is under way.”
“Growth forecasts for the euro zone have become highly pessimistic; this now includes those of the ECB. Yet the euro zone is being buoyed by a very large demand stimulus: increase in the fiscal deficit, acceleration in wages, fall in inflation thanks to the fall in oil prices, very low interest rates.”
“Even though there is clearly a cyclical slowdown in industry, it is important to not forget that this demand stimulus will provide a large boost to demand for services, and to not succumb to excessive pessimism or be fooled by the contrived and unconvincing arguments (trade war) that underpin these weak growth forecasts.”
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