In one line: Below zero; brace for a 50bp cut from the SNB.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Inflation in both the EZ and Switzerland fell below the respective central-bank targets in May.
- In the EZ, the decline solidifies the need for a rate cut this month, and we look for another one in Q3.
- In Switzerland, deflation is likely to become a mainstay, so brace for a 50bp rate cut from the SNB.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The 0.3% increase in Italian GDP in Q1 was driven by both domestic demand and net trade.
- In Switzerland, it was just domestic demand that pushed GDP up by a whopping 0.8% on the quarter.
- Growth is now slowing in both economies, though risks to our H2 calls are likely to the upside.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Switzerland was on a tear before the tariff shock; surveys point to slower growth in Q2.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Upturn in money supply continues; Italian GDP on a solid footing in Q1.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Strong, but remember difference in base effects in the CPI and HICP.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Consumption growth will slow in Q2.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Still consistent with slight slowdown in growth in Q2.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Stronger than the increase in goods spending in France.
Melanie Debono (Senior Eurozone Economist)Eurozone
A TENSE MONTH OF EU-US TRADE NEGOTIATIONS LIES AHEAD...
- ...WE STILL SEE UNCERTAINTY WEIGHING ON GROWTH
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Early evidence on Q2 points to upside risk to our forecasts for Spain and Italy…
- ...This reinforces our view that both will outperform France and Germany again.
- Southern Europe’s outperformance in H2 will be even bigger than we expect if US tariff hikes are cut.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The ECB’s measure of consumer inflation expectations in one year’s time rose again in April.
- Other measures are stable, while various data point to general economic weakness…
- ...So, we reiterate our call for the ECB to cut twice more this year, in June and July.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: EZ inflation expectations jumped on the eve of the tariff shock.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Falling energy consumption will weigh on spending in Q2.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: The gift that keeps on giving to ECB doves.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Downtrend continues as unemployment fears near Covid-time peak.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Boosted by investment and consumption.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Weak French inflation data put ECB doves in the driving seat ahead of next week’s May EZ HICP.
- German GfK consumer confidence and the ESI were robust midway through Q2; what tariff shock?
- EZ wage growth slowed sharply at the start of 2025; we doubt it will fall much further.
Melanie Debono (Senior Eurozone Economist)Eurozone
- A sustained 50% tariff on EU exports to the US would send the EZ economy into recession.
- The route to an EU-US trade deal is relatively easy, but the EU will respond in kind to US tariff threats.
- The German economy was in rude health in Q1, but trade uncertainty will now weigh on growth.
Claus Vistesen (Chief Eurozone Economist)Eurozone
