In one line: Political uncertain forces banks to tighten lending standards again.
Melanie Debono (Senior Eurozone Economist)Eurozone
- High gas prices and low inventories in the EU risk higher Eurozone inflation in Q2 and Q3.
- Russian gas imports will likely dwindle further; the US, Norway and Qatar can cover some of the gap…
- ...But at what price? And what will happen if Chinese or domestic US demand ramps up?
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Up marginally, supporting our view of a modest rebound in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Up, supporting our call for faster GDP growth in early 2025, but not enough to deter an ECB rate cut next week.
Melanie Debono (Senior Eurozone Economist)Global
In one line: Up, supporting our call for faster GDP growth in early 2025, but not enough to deter an ECB rate cut next week.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Our baseline assumes a mild US tariff rate increase and therefore limited impact on EZ exports and GDP.
- If the US raises tariffs on all goods apart from EU goods, GDP could rise by twice as much this year.
- A big universal tariff increase instead could see a Eurozone recession and GDP falling by 1% or so.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Falling back but still consistent with a supra-50 EZ composite PMI.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Construction supported growth in Q4.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Weak capex and declining private consumption raise alarms for Mexico’s near-term economic outlook.
- Potential tariff threats and trade negotiations could complicate economic ties between US and Mexico.
- Ongoing reforms and budget deficits will hinder Mexico’s economic flexibility and growth prospects.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: EZ goods trade was still a drag on growth in Q4.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Industry was a drag on EZ GDP again in Q4.
Melanie Debono (Senior Eurozone Economist)Eurozone
- EZ trade rebounded in November, thanks to a bounce-back in exports to the US…
- ...This is not a clear sign of front-loading, yet, but marks a rebound from US port closures in October.
- US firms are more focused on China at the moment, which risks limited near-term upside for EZ exports.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Improvement in industry in Q4 is partly why we think GDP growth rebounded.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Italian industrial production data for November were decent, as we expected…
- ...We continue to think Italian GDP rose in Q4, after stagnating in Q3; our 0.3% call is above consensus.
- Growth will rise in 2025 and—barring any political upheaval—the BTP-Bund spread will narrow further.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The PMIs suggest manufacturing in the Eurozone remained mired in recession at the end of 2024…
- …But we still hope US tariff front-running will lift the hard data for Q4 and Q1, in time.
- The upturn in real M1 growth continued midway through Q4; ignore this signal at your peril.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Consumer sentiment takes a hit as the Holidays approach.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Rising IESI still points to downside risks for Q4 GDP.
Melanie Debono (Senior Eurozone Economist)Eurozone
- President Lagarde said data in coming months—not weeks—will offer clarity on the ECB’s next moves.
- This lowers the chance of a 50bp rate cut in January; we think the Bank will opt for a smaller 25bp cut.
- Three conditions, though, may push the Bank to make the next cut a jumbo one.
Melanie Debono (Senior Eurozone Economist)Eurozone
