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Eurozone Q3 GDP Forecasts: Last Update

Several indicators which can be used to update our forecasts concerning Q3 GDP were published this week:

 

1/ France’s merchandise trade deficit widened in September as imports grew at nearly twice the rate of exports, the Customs Bureau said Friday. Note that trade deficit was revised higher in August and July.

 

2/ France’s industrial production decreased for the third successive month in September. In the third quarter, manufacturing production dropped 1.1 percent quarter-on-quarter.

 
3/ Germany’s trade surplus widened in September to a record high in a development that underlines criticism that Europe’s largest economy is not importing enough to boost other economies in Europe.

 

4/ Germany’s federal statistical office said industrial production declined by a seasonally adjusted 0.9% in September.

 

5/ Italy Stats Agency confirmed that Itilian GDP contracted in Q3.

 

As a consequence, we can build our scenarios with a more cautious approach regarding French and Italian 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 get the following forecasts:

 

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

 

Growth Contributions
Scenario Pessimistic Central Optimistic
Germany 0.054% 0.081% 0.105%
France -0.021% 0.000% 0.021%
Italy -0.054% -0.036% -0.018%
Spain (1st publication) 0.012% 0.012% 0.012%
Belgium (1st publication) 0.015% 0.015% 0.015%
Others 0.000% 0.017% 0.034%
Total 0.006% 0.089% 0.169%
Total (rounded) 0.0% 0.1% 0.2%


 

In the central scenario, growth expectation was revised downward to 0.1% QoQ. It seems that situation will normalize in Q3 with weaker growth both in France and Germany, a smaller contraction in Italy and a rebound in Spain.

Eurozone Q3 GDP Forecasts

Several indicators which can be used to forecast Eurozone Q3 GDP were published this week:

 

1/ Belgian economy grew 0.3% QoQ in Q3 (strongest since Q1 2011).

 
2/ Spanish GDP increased 0.1% QoQ in Q3 (first rebound after nine quarters of contraction).
 

3/ French consumer spending unexpectedly fell in September and in Q3.

 

4/ German real retail sales unexpectedly declined for a second straight month in September.
 

As a consequence, we can build our scenarios with a 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 get the following forecasts:

 

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

 

Growth Contributions
Scenario Pessimistic Central Optimistic
Germany 0.054% 0.081% 0.105%
France 0.021% 0.042% 0.063%
Italy -0.018% 0.000% 0.018%
Spain (1st publication) 0.012% 0.012% 0.012%
Belgium (1st publication) 0.015% 0.015% 0.015%
Others 0.000% 0.017% 0.034%
Total 0.084% 0.0167% 0.0230%
Total (rounded) 0.1% 0.2% 0.2%


 

In the central scenario, based on the main central banks’ expectations, Eurozone growth could reach 0.2% in Q3 2013.

BOI Quarterly Economic Bulletin: Italian Growth Stabilized in Q3 and Might Expand in Q4

After declining by 0.6% and 0.3% QoQ in Q1 and Q2, BOI Quarterly Economic Bulletin notes that last opinion surveys indicate that Italian growth stabilized in Q3 and should rebound in Q4.

 

This improvement is due to a recovery in exports which has been accompagnied by signs of more favourable investment environment. At the opposite, consumer spending continues to be held back by the weakness of disposable income in a context of rising unemployment rate.

 

Note that even if business surveys point to a gradual improvement in the coming months, the high dispersion of firms’ expectations concerning their own economic situation suggests the recovery is fragile and not broadly based.

 

The Quarterly Economic Bulletin is available here. (page 16-38)