Euro-zone economic outlook

Real domestic product in the Eurozone expanded by 0.4% in Q2, in line with our previous forecast. In the second half of 2015, real GDP is expected to expand at a moderate pace (+0.4% in Q3 and +0.5% in Q4).

Primarily driven by domestic demand, growth is set to accelerate from +0.9% in 2014 to +1.6% in 2015. Improving labour market conditions are expected to maintain growth of consumption expenditure at a solid pace, with the latter expanding by +1.8% in 2015.

Investment is expected to accelerate, but only slowly, mainly because construction investment remains a drag in many countries.  On average, total investment is set to grow by 1.7% in 2015. Assuming a fixed oil price at 48$ per barrel and a stabilization of the €/$ exchange rate at 1.12 in the coming quarters, inflation is expected to increase only moderately and reach +0.5% in Q1 2016.