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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.

Spanish Jobless Figures to be Released Next Week Will be Encouraging

Spanish employment figures to be released next week will be encouraging and the recession has started to turn a corner, Prime Minister Mariano Rajoy told an economic conference on Saturday while several people protested in Madrid:

 

“I’m not counting chickens here, however I recommend that you pay attention to unemployment and social security numbers on Tuesday the 4th” … “If the patterns we’ve seen are confirmed they will be clearly encouraging”

 

These data could be encouraging in a context where the situation on the labor market is catastrophic:
 
1/ Joblessness has increased for seven consecutive quarters, leaving almost 6 million people out of work.
2/ The Spanish unemployment rate reached 27.2% in April according to Eurostat.
3/ Almost one third of unemployed people have been out of work for more than two years.
4/ Two million Spanish households have no one earning a wage.

 

Regarding the economic trend, these numbers will be published after Spain recorded on May 17 its first monthly trading surplus since 1971 and will confirm that Spanish economy could emerge from recession by the end of the year.