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Euro-zone economic outlook

Euro-zone economic outlook

The Eurozone recovery is expected to pick up in the first quarter of 2014 with a GDP growth rate of +0.4% (after +0.2% and +0.1% respectively in the previous two quarters).

Growth is forecasted to decelerate slightly in the following two quarters. The recovery is expected to be broad based across sectors and countries and the consolidation of the upturn would be determined by a progressive improvement of domestic demand and a slightly positive contribution of the external sector.

Private investment will continue to grow over the forecasting horizon due to the increase in activity and the need for new production capacity after the sharp adjustment phase determined by the financial crisis. However, prospects for consumption remain subdued owing to fiscal austerity measures in some member States combined with a continuing labor market slack and slow growth in real disposable income.

Under the assumptions that the oil price stabilizes at USD 107 per barrel and that the euro/dollar exchange rate fluctuates around 1.38, the headline inflation is expected to increase marginally in the next two quarters, remaining well below the threshold of 2%.

Weaker external demand in emerging economies, especially in Asia, and an escalation of international tensions in Eastern Europe, which could determine a sharp rise in European gas prices and weight on households and firms' expenditure, are key downside risks related to this scenario.

tags:
consumptions, euro zone, forecasts, forecasts eurozone, forecasts ezeo, GDP, inflation, investments, IPI, production, statistics flash
theme:
Industry and construction, National accounts, Prices
document typology:
Press release
Reference period
I-II-III quarter 2014
Date of publication
7 April 2014
Full text
(pdf 428 KB)
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