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Q3

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.

The Spanish GDP Rebounded in Q3 after Nine Quarters of Contraction

Spain emerged from a two-year recession in the third quarter. Growth was driven by overseas sales as domestic demand fell 0.3%, the Bank of Spain said today. The decline in investment slowed and private consumption grew 0.1% from the previous quarter, when it was unchanged.

 

 

 

These data are positive to the extent Spanish economy represents 12% of the Eurozone economy (real GDP) which implies a positive contribution of 0.012% in Q3. However, Spanish economy is still depending on exports to drive growth as austerity continues to hold back domestic demand. The recent rise of euro against main currencies could weight on GDP in Q4.

 

More from Bloomberg:

 

Spain emerged from a two-year recession in the third quarter, strengthening Prime Minister Mariano Rajoy’s efforts to repair the nation’s finances and reduce the 26 percent jobless rate.
 
Gross domestic product expanded 0.1 percent from the second quarter, when it shrank 0.1 percent, and fell 1.2 percent from a year ago, the Madrid-based Bank of Spain estimated in its monthly bulletin today. The data, which are preliminary, matched the median estimate of 37 economists in a Bloomberg News monthly survey.

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)

Eurozone Q2 GDP Forecasts: Last Update

Since our last update, several German and French officials confirmed that the two largest economies grew in Q2 and even gave some indications regarding  second-quarter figures:

 

1/ The German economy probably expanded about 0.75 percent in the second quarter, according to a government estimate.

2/ After saying that recession is over, France’s finance minister denied that France has revised down its economic prospects for 2013 suggesting that the Q2 figures could be encouraging.

 

As a consequence, we can update our scenarios with a more optimistic 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 0.75% 0.75% 0.75%
France 0.1% 0.2% 0.3%
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 0.202% 0.202% 0.202%
France 0.021% 0.042% 0.063%
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 0.146% 0.0184% 0.0222%
Total (rounded) 0.1% 0.2% 0.2%


 

Last data change the final results (rounded) of each scenario. The central estimate becomes 0.2%. Therefore, thanks to Germany and France, the Eurozone economy should technically  recover (two positive quarters) in Q3 as several surveys  (Eurozone PMI, Sentix Investor Confidence) show that conditions have improved since the end of June.