Eurozone: No bounce back in GDP - ING

Bert Colijn, senior economist at ING, suggests that the latest print of 0.2% growth in GDP for the final quarter of 2018 remains disappointing, with 2018 annual growth has turned out to be only 1.8%.

Key Quotes

“The end of the year was marked by a disappointing recovery in auto production in Germany, downside risks further impacting confidence and yellow vest protests in France. The persistence in the growth decline indicates that there is more to it than one-offs with downside risks persisting early in 2019 as well.”

“Italy saw growth decline by -0.2% in Q4, therefore entering a technical recession and adding to worries about the stability of the third largest eurozone economy. More positive was France where despite the impact from the yellow vest protests, GDP growth held up at 0.3%.”

“For the ECB, the weak growth rate means that the current staff projections of 1.7% growth for 2019 will be a tall order. Given the weakness in surveys about eurozone growth in January as well, it is likely that the 2019 growth forecast will see a substantial downgrade in March when the new staff projections are released.”