In one line: A new record high, thanks to tariff front-running by US firms.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Industry supported EZ GDP in Q1, as did the labour market.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: The core remains soft, but surveys point to upside risks.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A strong first quarter for the Swiss economy.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Switzerland’s economy was on a tear before the trade-tariff shock hit.
- Strong growth is not inflationary, and is now slowing; the SNB will cut in June, taking rates below zero.
- EZ GDP was revised down in Q1 and will also slow ahead, but the unemployment rate will stay low.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Front-loaded fiscal stimulus can add 0.5pp to German growth this year, in the best-case scenario.
- Defence spending is poised to accelerate after a slow start to the year, but the multiplier is low.
- Front-loading of infrastructure spending via €100B in funding for local government is a key upside risk.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Investor sentiment, measured by the ZEW, improved in May despite a fall in the current conditions index.
- Investor sentiment now points to a rebound in the PMI as markets forget all about tariffs.
- Near-real time data also signal resilience in the EZ economy midway through the second quarter.
Melanie Debono (Senior Eurozone Economist)Eurozone
- A temporary reprieve in the US–China trade war is worth far less than financial markets are assuming.
- Early signs suggest Mr. Trump will go hard on the EU, keeping uncertainty for the EZ economy elevated.
- Isabel Schnabel is coming out swinging for ECB hawks, but will her argument carry the day?
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Industry will likely support GDP again in Q2, but downside risks remain.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The EU’s announcement of retaliation against US tariffs is an attempt to get Washington to the table.
- Brussels’ WTO case against the US indicates that it won’t accept 10% as a floor for tariffs.
- EU purchases of energy, agricultural products and defence goods are the clearest route to a deal.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Decent, and strength likely to continue for now.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Soaring; Q1 GDP growth on track for an upward revision.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Still trending sideways, as they have since November.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Rise in demand in Germany pulls up headline.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The EZ construction PMI rose in April, on the back of a recovery in new orders in Germany.
- Construction activity is still faring better in Italy than in Germany or France.
- The sector is likely to support EZ GDP in Q2, as it seems to have done in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Swiss inflation fell to a lower-than-expected zero in April, with a knock-on effect on our forecasts…
- ...We now see deflation until mid-2026; the SNB will cut its policy rate below zero in June in response.
- We look for a 50bp rate cut at the next meeting, taking the key policy rate to -0.25%.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Jump in April core inflation was due to Easter effects in services; the remaining components were soft.
- Dovish forecasts from the ECB will pave the way for for a back-to-back 25bp rate cut next month…
- …and we now look for an additional 25bp cut in July, but also hikes next year, in June and September.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Consistent with slower growth in Q2.
Melanie Debono (Senior Eurozone Economist)Eurozone
