Euro-zone economic outlook

In a lacklustre international environment, the Eurozone is expected to remain resilient and continue to recover at a moderate pace. Real gross domestic product is estimated to increase by 0.4% quarter-on-quarter in the first three quarters of 2016.

The driving force behind this development is a dynamic domestic demand. An upturn in household purchasing power is expected to support private consumption, stimulated by the past drop in oil prices. The massive influx of refugees, mainly in Germany, is expected to raise public consumption and transfers.

Total investment is forecast to grow at an accelerating pace in the first three quarters of 2016, driven by rising capacity utilisation and low borrowing costs.

Under the assumption that Brent oil price remains stable at $40 per barrel, and the Dollar/Euro exchange rate fluctuates around 1.12, inflation is expected to be negative in Q2 before picking up slightly in Q3.