In Q4 2012, activity in the Eurozone contracted by 0.6% (-0.1% in the previous quarter). The decrease in exports put a drag on GDP growth while domestic demand remained on a negative trend. However, in the first quarter of 2013, the business climate has slightly improved. As a result, Eurozone activity is expected to turn positive in the second quarter: 0.0% in Q1, +0.1 % in Q2 and +0.2% in Q3.
Exports are projected to accelerate, as demand from emerging markets will expand at an increasing pace, reflecting monetary and fiscal easing. Furthermore, GDP growth in the United States is also expected to be buoyant and support Eurozone exports. This acceleration in external demand together with a gradual easing of financial tensions will support a stabilization of investment.
Private consumption is projected to decline in Q1 before stabilizing in Q2 and Q3 as a result of a decline in inflation and more gradual fiscal consolidation despite the persistent increase in unemployment. Under the assumption that the oil price stabilizes at USD 110 per barrel and the euro/dollar exchange rate fluctuates around 1.30, inflation is expected to decrease from 1.8% in Q1 2013 to 1.5% in Q3 2013. This forecast assumes that financial tensions in Europe do not escalate. It is subject to various risks, including the evolution of the political situation in the Eurozone.