An abating recoveryEuro-zone economic outlook - 3th Quarter 2010

After a GDP increase of 0.2% in Q1 2010 economic prospects in the Euro Zone remain subdued. Real GDP is forecasted to accelerate, +0.5%, in Q2 2010 and then to decelerate, +0.3% and +0.2% in Q3 and Q4 2010, respectively. Despite strong readings from surveys in Q2, several factors would weigh on growth in H2: fading fiscal stimulus in the coming quarters; fiscal consolidation; the still restrictive credit conditions and increased financial market uncertainty following the recent sovereign-debt crisis. After the strong increase by 4.1% in Q1 2010, industrial production is likely to lose momentum over the forecast horizon: the current business climate is still below its historical average. Private consumption is expected to almost stagnate (+0.1% per quarter) due to less supportive fiscal policies, high unemployment rate and increasing precautionary savings. Investment is expected to rebound at a rate of 1.0% in Q2 2010 due to a weather-related postponement of construction investment in Q1 2010. Thereafter the low degree of capacity utilization and the still restrictive credit supply will dampen investment growth which is expected to moderate to 0.4% in both Q3 and Q4 2010. On the assumption that in Q3 and Q4 2010 the oil price will stabilize at USD 75 per barrel of Brent and that the dollar/euro exchange rate will fluctuate around 1.22, inflation should move to 1.7% in September and to 1.6% in December 2010.

Euro-zone economic outlook
Paru le : 07/07/2010