Group Economics
Daily Insight
Macro & Financial Markets Research Aline Schuiling & Maritza Cabezas
Eurozone GDP growth picks up
+ 31 20 343 5606
14 May 2015
GDP growth in the eurozone picked up in the first quarter of this year … … growth was somewhat below the forecasts, but the report held some positive surprises as well US consumers cautious, but we expect a breakthrough in consumer spending in the coming months
Eurozone GDP growth picked up in Q1 … GDP expanded by 0.4% qoq in the first quarter of this year, up
GDP growth 2015 Q1 selective eurozone countries
from 0.3% in 2014Q4. The outcome was below the consensus
% qoq
and our own forecast. Still, the report held some positive surprises as well. Growth in France (0.6% qoq) and Italy
l
1.0
Eurozone
(0.3%) was stronger than expected, after both countries had significantly underperformed the eurozone last year. Italy’s
0.5
economy moved out of recession, with GDP recording its first expansion after five consecutive quarters of contraction or stabilization. Another surprise was Greece. Although the
0.0
economy moved back into recession, the decline was smaller in Q1 (-0.2%) than in Q4 (-0.4%), despite the rising uncertainties about a new deal with Europe and the IMF and
-0.5 ES
FR
NL
PT
IT
DE
BE
AT
FN
GR
Grexit worries. On the other side of the spectrum, the data for Germany (0.3%) and the Netherlands (0.4%) came in lower
Source: Bloomberg
than expected, although both countries had registered very high growth rates in Q4 and the slowdown probably partly
US consumers cautious
reflects the normal pattern of volatility in the quarterly numbers.
Yesterday’s April retail sales report showed that consumer spending failed to pick up as expected, although March’s data
… on the back of exports and consumption
was upwardly revised from an already strong level. At the
Although the details of growth have not yet been published, we
same time, February’s retail sales were slightly downwardly
think that net exports contributed positively to growth. The
revised. Headline retail sales were flat in April following a
weak euro should have supported exports, although the
revised 1.1% gain in March. The retail sales control component
temporary slowdown in the US economy in Q1 might have
(ex. autos, gas, building materials and food services), which is
limited the expansion. Still, eurozone industrial production,
direct input for GDP was also flat, down from 0.5% the
which tends to move roughly in line with exports, accelerated
previous month. Looking at the details, the largest decline was
in Q1. Moreover, growth in car registrations and retail sales
in vehicles and furniture, while spending on health was strong.
suggest that private consumption growth was a bit higher in Q1
Certain discretionary spending components, including clothing,
than in Q4. Finally, fixed investment probably expanded
sport goods and restaurants remained firm.
moderately in Q1, roughly in line with growth in Q4. Breakthrough in consumer spending still to come Further increase in growth expected
Until now, consumers have been saving much of the gains
The eurozone economy should gather pace in the coming
from the cheaper gasoline. Gasoline prices increased in April
quarters. The impact of the weak euro and low energy prices
but remain below year-ago levels, suggesting that consumers
will continue to work its way through the economy with a delay.
are still benefitting from lower fuel costs . We expect to see a
Meanwhile monetary conditions are expected to ease further
breakthrough in consumer spending in the coming months as
on the back of the ECB’s QE programme and we expect more
households will eventually use the windfall gains from lower
euro weakness in the second half of this year. Moreover, bank
energy costs. Moreover, consumer confidence remains at high
lending conditions have eased in the past few quarters, while
levels, while the labour market remains strong.
both the housing market and the labour market have bottomed out and should improve further in the coming quarters.