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Aline Schuiling, senior economist at ABN AMRO, points out that the flash estimate of Eurozone’s GDP growth was stronger than the consensus as it strengthened to 0.4% qoq in 2019Q1, up from 0.2% in 2018Q4.

Key Quotes

“No details of growth have been reported yet at the eurozone level, but monthly economic data and detailed Q1 GDP data from some individual countries suggest that the strength (as was expected) was concentrated in private consumption, particularly in car sales.”

“Also France (GDP growth at 0.3% in Q1, the same as in Q4) reported a rise in private consumption growth to 0.4% qoq in Q1 from 0.0% in Q4. Finally, Italy (GDP growth to 0.2% from -0.1%) reported a rise in new car registrations by almost 30% qoq in Q1, while final domestic demand actually contracted.”

“Finally, growth in exports weakened significantly in France (to 0.1% qoq in Q1, from +2.2% in Q4) and Spain (to -0.5% from +0.7%). Belgium (GDP growth at 0.2% qoq in Q1, down from 0.4% in Q4), did not report any details of growth, but considering the economy’s large exposure to foreign trade, it seems that declining exports played some part in the weakening of growth.”

“Looking forward, we expect growth to slow down again in Q2, as private consumption growth should weaken while exports and investment are expected to remain sluggish on the back of still lacklustre world trade growth. Only later this year, we do expect a more sustainable rise in GDP growth to around the trend rate (of around 0.3-0.4% qoq) due to a moderate improvement in global trade growth.”