29 Apr 2016
Eurozone Q1 GDP: Relative strong figures, not expected to last - Lloyds
According to the first estimate, Eurozone Q1 GDP growth rate was 0.6%, stronger-than-expected. Analysts from Lloyds Bank expect a return to softer growth in Q2.
Key Quotes:
“For the first time, Eurostat has published first estimates of eurozone GDP at a comparable timeliness to their US and UK counterparts. It estimated Q1 GDP growth of 0.6%q/q (1.6%y/y), which is stronger than consensus forecasts for a rise of 0.4%. In fact, the eurozone economy expanded at a quicker than either the US or UK in Q1.”
“The survey data for the eurozone have signalled a more subdued pace of expansion in Q1 and the start of Q2. As such, the relatively strong growth figures for Q1 are not expected to last and we should expect a return to softer growth in Q2.”
“As we expected, headline inflation returned to red territory, dipping to ‑0.2%y/y from 0.0%y/y in March (…) A return to slightly negative inflation was anticipated by ECB President Draghi in his press conference last week and is therefore not a surprise to policymakers. It is expected to remain around current levels before picking up in the second half of the year, but the path towards the ECB’s target is likely to be very gradual, given that significant spare capacity in the economy is likely to persist, even after the firm Q1 GDP figures.”
Key Quotes:
“For the first time, Eurostat has published first estimates of eurozone GDP at a comparable timeliness to their US and UK counterparts. It estimated Q1 GDP growth of 0.6%q/q (1.6%y/y), which is stronger than consensus forecasts for a rise of 0.4%. In fact, the eurozone economy expanded at a quicker than either the US or UK in Q1.”
“The survey data for the eurozone have signalled a more subdued pace of expansion in Q1 and the start of Q2. As such, the relatively strong growth figures for Q1 are not expected to last and we should expect a return to softer growth in Q2.”
“As we expected, headline inflation returned to red territory, dipping to ‑0.2%y/y from 0.0%y/y in March (…) A return to slightly negative inflation was anticipated by ECB President Draghi in his press conference last week and is therefore not a surprise to policymakers. It is expected to remain around current levels before picking up in the second half of the year, but the path towards the ECB’s target is likely to be very gradual, given that significant spare capacity in the economy is likely to persist, even after the firm Q1 GDP figures.”