Eurozone: Recovery continues amid huge political risksEuro-zone economic outlook - 3rd quarter 2016
UK referendum increased uncertainty about the economic growth prospects in the Eurozone: while the short run impact on the activity of the area, via the trade channel, should be limited until the fourth quarter of 2016, the medium term effect strongly depends upon future agreements between UK and EU countries. In this setting, Eurozone real gross domestic product is estimated to increase by 0.3% in Q2, slightly accelerate to 0.4% in Q3 and then slowdown to 0.3% in Q4. The average GDP growth for 2016 is set to be 1.6%. Consumption is expected to remain the prime driver, thanks to improving labour market conditions and subdued inflation. Investment is set to gain momentum over the forecast horizon, sustained by the further easing of financing terms and improved prospects. Under the assumption that Brent oil price remains stable at $49 per barrel, and the Dollar/Euro exchange rate fluctuates around 1.12 dollar per euro, inflation is expected to moderately pick-up during the rest of the year bringing the annual average to +0.3%.