Photographer: Jasper Juinen/Bloomberg

Economists Boost Euro-Area Outlook, See Best Year in a Decade

  • Outlook has improved after strong first-half performance
  • Bloomberg survey of 58 economists conducted Sept. 8-14

The euro-area economy just got another upgrade, with economists seeing the fastest expansion since before the financial crisis.

In the latest survey by Bloomberg News, gross domestic product is forecast to increase 2.1 percent this year, up 0.1 percentage point compared with the August survey. The revision -- the eighth positive reassessment over the past year -- comes just over a week since the European Central Bank also issued its own more optimistic assessment, with a forecast of 2.2 percent.

Expansion in the 19-nation economy last hit 2.1 percent in 2010, though it’s not been stronger since 2007. The pace of growth may slow to 1.8 percent next year -- though that’s still better than the August prediction -- and 1.5 percent in 2019. That would be the weakest pace since 2014.

While economists have regularly upgraded their 2017 outlook for economic growth, they’ve been less optimistic regarding inflation, and that remained the case this month. Looking ahead, consumer prices are seen rising just 1.1 percent in early 2018, before rebounding to 1.6 percent by year’s end and then averaging 1.7 percent in 2019.

Key Takeaways

  • Survey of 58 economists conducted from Sept. 8 to Sept. 14
  • GDP to grow 2.1% this year, 1.8% in 2018 and 1.5% in 2019
  • Chance of a recession happening over the next 12 months is 10 percent, according to 11 respondents
    • See graph of 2017 GDP forecast evolution
  • HICP to average 1.5% this year, 1.4% in 2018 and 1.7% in 2019
    • See graph of inflation forecasts compared to ECB’s 2% target
  • ECB refi rate seen at 0.00% by end-4Q17, current rate is 0.00%
  • ECB deposit rate seen at -0.40% by end-4Q17, current rate is -0.40%
    • First 15 bps hike seen in 1Q19 versus 40bps hike previously expected

Full Survey Results

3Q4Q1Q2Q3Q4Q1QAvg.Avg.Avg.
2017201720182018201820182019201720182019
GDP QOQ%0.5%0.4%0.4%0.4%0.4%0.4%0.4%n/an/an/a
 Previous survey0.5%0.4%0.4%0.4%0.4%0.4%0.4%n/an/an/a
GDP YOY%2.2%2.1%2.0%1.7%1.7%1.7%1.6%2.1%1.8%1.5%
 Previous survey2.1%2.0%1.8%1.7%1.7%1.7%1.7%2.0%1.7%1.5%
Household Cons. YOY%1.8%1.7%1.7%1.6%1.6%1.6%1.5%1.7%1.6%1.5%
 Previous survey1.6%1.6%1.6%1.6%1.5%1.5%1.5%1.6%1.5%1.4%
Government Cons. YOY%1.4%1.3%1.3%1.2%1.2%1.1%1.1%1.2%1.3%1.2%
 Previous Survey1.2%1.2%1.2%1.2%1.2%1.1%1.2%1.2%1.2%1.2%
Gross FCF YOY%2.7%2.3%3.1%2.9%2.8%2.6%2.4%2.8%3.1%2.4%
 Previous Survey3.4%2.5%2.9%2.7%2.9%2.8%2.6%3.4%3.0%2.5%
Imports YOY%4.6%3.8%4.4%4.2%4.1%4.0%3.1%4.2%3.8%3.4%
 Previous survey5.4%3.7%3.7%3.8%4.8%4.8%3.3%4.5%3.7%3.4%
Exports YOY%4.9%4.4%3.8%3.6%3.7%3.6%3.2%4.5%3.5%3.2%
 Previous survey5.0%4.1%3.8%3.6%4.2%4.3%3.5%4.4%3.7%3.4%
HICP YOY%1.4%1.3%1.1%1.3%1.5%1.6%1.6%1.5%1.4%1.7%
 Previous survey1.4%1.3%1.2%1.4%1.5%1.6%1.7%1.5%1.4%1.7%
IP YOY%2.4%2.1%2.4%1.8%1.8%1.8%1.5%2.1%2.0%1.6%
 Previous survey2.3%2.0%2.3%2.0%1.8%1.7%1.5%2.0%2.0%1.6%
Unemployment rate9.1%9.0%8.8%8.7%8.6%8.6%8.4%9.2%8.6%8.2%
 Previous survey9.1%9.0%8.9%8.8%8.6%8.5%8.4%9.2%8.7%8.1%
Current Acct. % GDP3.4%3.0%3.0%2.9%3.2%2.8%n/a3.1%2.9%2.7%
 Previous survey3.5%3.1%2.9%3.3%3.2%2.7%n/a3.1%3.0%2.6%
Budget as a % GDPn/an/an/an/an/an/an/a-1.4%-1.3%-1.2%
 Previous surveyn/an/an/an/an/an/an/a-1.4%-1.4%-1.2%
3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q
2017201720182018201820182019201920192019
ECB Rate--0.00%0.00%0.00%0.00%0.00%0.05%0.20%0.25%0.50%
 Previous survey--0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.25%0.50%
Deposit Rate---0.40%-0.40%-0.40%-0.40%-0.40%-0.25%-0.10%0.00%0.00%
 Previous survey---0.40%-0.40%-0.40%-0.40%-0.40%0.00%0.00%0.10%0.25%
Three-Month Euribor-0.33%-0.33%-0.30%-0.30%-0.30%-0.25%-0.10%0.08%0.15%0.20%
 Previous survey-0.33%-0.33%-0.30%-0.30%-0.30%-0.27%-0.18%-0.05%0.11%0.30%
Oct. 26Dec. 14Jan. 25Mar. 8Apr. 26June 14July 26Sept. 13Oct. 25Dec. 13
2017201720182018201820182018201820182018
ECB Rate (by date)0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%
 Previous survey0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%n/a

NOTE: All figures are expressed as of the end of the quarter except for GDP.

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