Eurozone Economic Watch. May 2018

Transcription

1 Eurozone Economic Watch May 2018

2 BBVA Research - Eurozone Economic Watch / 2 Eurozone: more moderate growth with higher uncertainty The eurozone GDP growth slowed in more than expected. Beyond temporary factors in early year and some recovery in hard data in March, further decline in confidence data up to May point to a more moderate growth forward and increase concerns about the negative effect of uncertainty on the real economy in coming months if it persists. Exports recovered in March from early declines in the year, but the increase in industrial output and retail sales was not enough to avoid a quarterly decline. Despite this, the labour market s spare capacity continued to narrow. The MICA-BBVA model projects GDP growth to remain at around 0.4% QoQ in. Data so far for 2018 put a downward bias on our annual growth forecast of 2.3%. Inflation slowed to +1.2% YoY driven by a lower contribution from services, because of calendar effects from Easter holidays. Accordingly, core inflation declined by 0.2pp to +1.1%, but we continue to foresee a gradual increase in core figures during the year. Recent oil price developments and euro depreciation will add upward pressures for headline inflation in coming months. Downward risks continue to increase, characterized mainly by political and geopolitical uncertainty and protectionism that could lead to tighter financial conditions and protracted higher commodity prices.

3 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 BBVA Research - Eurozone Economic Watch / 3 More moderate growth after slowing in GDP growth slowed to 0.4% QoQ in after 0.7% in the previous quarter, more than expected. Our MICA-BBVA projects a similar quarterly pace for (0.4% QoQ) and cools down expectations of a possible rebound in growth in GDP, contribution by components (%QoQ, pp) 2.5 GDP and MICA forecasts (%QoQ) Imports Change in inventories Public consumption Real GDP Exports Gross fixed capital formation Private consumption CI 20% CI 40% CI 60% Observed

4 1Q17 2Q17 3Q17 1Q17 2Q17 3Q17 1Q17 2Q17 3Q17 1Q17 2Q17 3Q17 Germany France Italy Spain BBVA Research - Eurozone Economic Watch / 4 Broad-based moderation across countries in early 2018, except in Spain which showed a stable growth pace GDP and expenditure contribution by country (%QoQ, pp) Germany France Italy Spain Diff. GDP level relative to 2008 Private consumption Public consumption Gross fixed capital formation Change in inventories Exports Imports Real GDP Eurozone GDP

5 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18 BBVA Research - Eurozone Economic Watch / 5 Confidence figures decline further in May, reflecting higher uncertainty This worsening is observed in both manufacturing and services for the fifth month in a row. Although confidence remains still at high levels, it points to a more moderate growth onwards than that observed in 2H17 and increases concerns about the negative effect of higher and persistent uncertainty on private consumption and investment PMI and GDP (level, %QoQ) EC confidence survey (level) PMIs level GDP (% QoQ) Real GDP (% QoQ) Manufacturing PMI PMI Services PMI ESI (lhs) Consumer (rhs) Industrial (rhs) Services (rhs)

6 Apr-18 May-18 Apr-18 May-18 Apr-18 May-18 Apr-18 May-18 BBVA Research - Eurozone Economic Watch / 6 Across countries, sentiment declines markedly in Germany and France, but is still consistent with a solid expansion According to flash figures, growth slowed markedly both in Germany and France, but accelerated across the rest of the region Although some moderation in optimism was expected due to some evidence on supply constraints and the appreciation of the euro over last year, the less positive outlook could be reflecting softer global tailwinds PMI survey (level) Q17 3Q17 3Q17 3Q17 Germany France Italy Spain Composite PMI Manufacturing PMI Services PMI

7 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 BBVA Research - Eurozone Economic Watch / 7 Industrial output picked up in March, but was not enough to avoid a quarterly loss in Industrial production recovered in March (+% m/m) due to stronger output of consumer goods. Despite disappointing figures in the production of both investment and durable goods, increasing capital utilization by firms would suggest further private investment in coming months Industrial production (level, %QoQ) IP (level) IP (% QoQ) IP capital equipment, investment in M&E and capacity utilization (%QoQ, %) Inv. M&E, IP capital (% QoQ) Capacity utilization (%) IP (2012=100) IP (% QoQ) Investment M&E (% QoQ) Capacity Utilization (%) IP Capital (% QoQ)

8 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 BBVA Research - Eurozone Economic Watch / 8 The trade balance stabilized in, with exports mostly flat and imports growing moderately Trade balance ( bn, %GDP) Exports by destination (%QoQ, pp) Exports, imports & trade balance ( bn) Trade balance (% GDP) Trade balance ( bn) Exports ( bn) Imports ( bn) Trade balance (%GDP) Other EU countries China LatAm Total Exports United States Asia (ex China) Rest of world

9 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 BBVA Research - Eurozone Economic Watch / 9 Retail sales recovered somewhat in March from early year loses, but slowed down overall in Retail sales have fallen in, but have recovered in March and the fundamentals of consumption remain strong. Consumer confidence is still high and employment gains are solid. Retail sales and consumer confidence (%QoQ, pts) Retail sales and total wage bill (%YoY, pp) Retail Sales (% QoQ) Consumer Confidence Retail Sales (% QoQ) Consumer Confidence Employees Total wage bill Real compensation Retail sales

10 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 BBVA Research - Eurozone Economic Watch / 10 The unemployment rate stayed flat at 8.5%, although the idle capacity in the labor market continued to narrow Unemployment rate by country (%) 20 The unemployment kept steady at 8.5% in March, with still slack to absorb in the labour market The decline of unemployment continued for the prime-age population Annual unemployment change by gender & age (millions) Mar-17 Feb-18 Mar-18 Eurozone Germany France Italy Spain Women 25-74Y Men 25-74Y Men < 25Y Women < 25Y Total

11 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 BBVA Research - Eurozone Economic Watch / 11 Headline and core inflation declined in April due to calendar effects HICP decreased to 1.2% YoY in April, with a lower contribution of the services component due to calendar effects from Easter holidays Core inflation also went down by 0.2pp to 1.1% YoY but will revert slowly during the year to figures of around % Inflation and contribution of components (%YoY, pp) Core and trimmed-mean inflation (%YoY) Services Processed Food Unprocessed Food Non-energy industrial goods Energy HICP (% y/y) Trimmed mean inflation Core inflation

12 BBVA Research - Eurozone Economic Watch / 12 Inflation declined in most countries in April, except in France Headline and core inflation (%YoY) Germany France Italy Spain Portugal Austria Belgium Finland Netherlands Greece Ireland Headline Inflation (% YoY) Core Inflation (% YoY) Headline Inflation 2017 Core Inflation 2017

13 Eurozone Economic Watch May 2018

14 BBVA Research - Eurozone Economic Watch / 14 Disclaimer This document has been prepared by BBVA Research Department, it is provided for information purposes only and expresses data, opinions or estimations regarding the date of issue of the report, prepared by BBVA or obtained from or based on sources we consider to be reliable, and have not been independently verified by BBVA. Therefore, BBVA offers no warranty, either express or implicit, regarding its accuracy, integrity or correctness. Estimations this document may contain have been undertaken according to generally accepted methodologies and should be considered as forecasts or projections. Results obtained in the past, either positive or negative, are no guarantee of future performance. This document and its contents are subject to changes without prior notice depending on variables such as the economic context or market fluctuations. BBVA is not responsible for updating these contents or for giving notice of such changes. BBVA accepts no liability for any loss, direct or indirect, that may result from the use of this document or its contents. This document and its contents do not constitute an offer, invitation or solicitation to purchase, divest or enter into any interest in financial assets or instruments. Neither shall this document nor its contents form the basis of any contract, commitment or decision of any kind. In regard to investment in financial assets related to economic variables this document may cover, readers should be aware that under no circumstances should they base their investment decisions in the information contained in this document. Those persons or entities offering investment products to these potential investors are legally required to provide the information needed for them to take an appropriate investment decision. The content of this document is protected by intellectual property laws. It is forbidden its reproduction, transformation, distribution, public communication, making available, extraction, reuse, forwarding or use of any nature by any means or process, except in cases where it is legally permitted or expressly authorized by BBVA.