Eurozone Q2 GDP Forecasts: An Update

Since our last update, several indicators which can be used to forecast Eurozone Q2 GDP were published:

 

1/ Belgian economy, which represents 5% of Eurozone real GDP, grew by 0.1% QoQ in Q2.

 
2/ Despite French consumer goods spending increased in Q2, it  fell more than expected in June.

 
3/ German real retail sales also dropped well below expectations in June.
 
4/ Italian GDP was down 0.2% QoQ in Q2.

 

As a consequence, we can update our scenarios with a more cautious approach regarding French and German contributions. By taking into account the weight of each economy in the euro area (Germany: 27%; France: 21%; Italy: 18%; Spain: 12% and Belgium: 5%), we can adjust our forecasts:

 

Growth Forecasts
Scenario Pessimistic Central Optimistic
Germany 0.2% 0.3% 0.4%
France 0.0% 0.1% 0.2%
Italy (1st publication) -0.2% -0.2% -0.2%
Spain (1st publication) -0.1% -0.1% -0.1%
Belgium (1st publication) 0.1% 0.1% 0.1%
Others -0.2% -0.1% 0.0%

 

Growth Contributions
Scenario Pessimistic Central Optimistic
Germany 0.054% 0.081% 0.108%
France 0.000% 0.021% 0.042%
Italy (1st publication) -0.036% -0.036% -0.036%
Spain (1st publication) -0.012% -0.012% -0.012%
Belgium (1st publication) 0.005% 0.005% 0.005%
Others -0.034% -0.017% 0.000%
Total -0.023% 0.042% 0.0107%
Total (rounded) 0.0% 0.0% 0.1%


 
Last data change the final results (rounded) of our central and optimistic scenarios. The central estimate becomes 0.0%. Therefore, France and Germany should post strong numbers in Q2 to expect a technical recovery (two positive quarters) in Q3 which seems to be confirmed by the last July and August surveys (Eurozone PMI, Sentix Investor Confidence),