A change of pace in sightEuro-zone economic outlook - 2nd quarter 2015
In the Eurozone, activity picked up by 0.3% in Q4 2014, after moderately expanding in Q3 (+0.2%). The recovery in production is expected to continue. GDP is to slightly accelerate in Q1 2015 (+0.4%) and then continue to expand at the same rate over the following quarters. The driving forces of the upturn will be a significant pick up in net exports and a robust growth of private consumption over the forecast horizon, driven by weaker energy prices. Labour market conditions will continue improving, boosting marginally real disposable income and private consumption. Easing of credit conditions, improving prospects for internal demand and the need to replace an ageing capital stock will lead to a modest investment speedup in the first three quarters of 2015, from +0.1% in Q4 2014 to +0.5% in Q3 2015. Under the assumption that Brent oil price remains stable at 56 USD per barrel and the Euro/Dollar exchange rate fluctuates around 1.10, inflation is expected to fall to -0.3% in Q1 2015. This drop reflects diminishing pressures from global commodity prices and weaker energy prices, but also still low prospects for core inflation. Inflation is to be broadly stable in Q2 and Q3. This forecast assumes that an agreement between Greece and its creditors will preserve the Eurozone currency bloc stability but the outlook would otherwise be grimmer. On the positive side, the ECB’s QE may have larger effect on investment growth than supposed in this forecast.