Eurozone GDP growth robust, but to slow in 2017 - BNPP

Analysts at BNP Paribas notes that the economic growth in the Eurozone proved resilient to adverse shocks over the course of this year and will end it in relatively robust shape.

Key Quotes

“Survey data available so far – such as the composite PMI and the European Commission’s economic sentiment indicator – are consistent with above-trend GDP growth of about 0.4% q/q in Q4, up from 0.3% in Q3, which would leave average GDP growth at 1.6% for this year.”

“That said, we are looking at a slowdown from last year’s 1.9% growth with a further moderation to come over 2017, on average, to 1.2%. There are three main reasons for this: 

• pressure on real household income growth as higher energy prices push up headline inflation;
• a slowdown in exports to the UK, which accounts for about 14% of the Eurozone’s goods exports and is, therefore, as important as the US as a source of external demand; and 
• reduced support to growth from both monetary policy (fading QE effects) and fiscal policy.”