In one line: The deficit in goods is widening, but the services surplus is rising.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Another rise in consumption pulled Q3 GDP in Switzerland above its pre-pandemic level.
- But activity is now softening; fast-falling surveys force us to cut our Q4 GDP estimate.
- The franc will strengthen further; we look for EURCHF of 1.03 at end-21 and 1.02 by mid-2022.
Claus Vistesen and Melanie DebonoEurozone
- Switzerland's economy probably grew by 2% q/q in Q3, taking output back above its pre-virus level.
- Q3 is old news; growth is now slowing and the risks to the outlook are rising as virus cases surge.
- The SNB won't stay happy with CHF 1.05 per euro for much longer.
Claus Vistesen and Melanie DebonoEurozone
- Euro depreciation adds additional upside risk to the ECB's December core inflation forecasts.
- The outlook for relatively rapid Fed tightening is leading the euro lower, but fundamentals matter too.
- Recent comments from Isabel Schnabel suggest the ECB is o.k. with expectations of a hike in 2023.
Claus Vistesen and Melanie DebonoEurozone
In one line: Still sinking; a wider deficit with China is primarily to blame.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Spain's GDP breakdown suggests that consumers' spending fell in Q3; it almost surely didn't.
- An upward revision to consumption will offset down-ward revisions to net trade and manufacturing.
- We think revisions will show that GDP rose by 2.5% in Q3, 0.5pp quicker than first estimated.
Claus Vistesen and Melanie DebonoEurozone
- The trade wars between the EU and the U.S. seem over, but a new front is opening with the U.K.
- Slowing demand from China is the biggest threat to euro area exports in the next six months.
- Our forecasts for the U.S., U.K. and China point to a slowdown in EZ goods exports next year.
Claus Vistesen and Melanie DebonoEurozone
- EZ imports are still outpacing exports by a hand- some margin; further downside for net trade in Q4?
- The EZ trade deficits with Asia and China are widening, this could sting Q4 GDP growth.
- Headline inflation in France is still rising, but the national core rate seems to have peaked.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The message from the PMI: The reopening boom is over, and supply-side woes are hitting demand.
- We are adjusting our EZ GDP growth forecast for Q4 down a tad, to 0.7-to-0.8% quarter-on-quarter.
- No change from the SNB, as expected; Spain's Q2 GDP growth cut by more than half.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB will slow the pace of PEPP in Q4, probably by around €20B, to €60-€70B per month.
- Bond yields fell as Ms. Lagarde spoke, but will the ECB's decision on PEPP in Q4 satisfy markets?
- The German trade surplus snapped back in July, as imports plunged; more of the same is coming.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB will announce a slowdown in the pace of PEPP today, but markets likely won't flinch.
- The central bank's new forecasts will deliver upgrades to the outlook for growth and inflation.
- Trade data in France suggest that tourism is rebounding, but a full recovery is still a way off.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Don't fret the July plunge in EZ retail sales; Q3 as a whole will be OK, and services will do even better.
- The risk of new virus restrictions remains low, de- spite the uptick in new cases since the end of Q2.
- Consumers' spending in services will deliver strong growth in Q3 in the major EZ economies.
Claus Vistesen (Chief Eurozone Economist)Eurozone
EZ bond yields have been dragged lower as investors have abandoned the reflation trade.
Idiosyncratic factors will weigh on bund yields in H2, but we still see room for a rise to -0.3-to-0.4% in Q4.
Energy imports, and goods demand from Eastern Europe, are weighing on Germany's trade surplus.
Claus Vistesen (Chief Eurozone Economist)Eurozone
Peruvian New Sol — President Castillo already on fire
Chilean Peso —The copper-driven sell-off
Colombian Peso — Deteriorating fundamentals
Andres Abadia (Senior International Economist)Latin America
This is not, on the face of it, the best time to take a step back and look at the prospects for net exports in the Eurozone in a post-Covid world.
Claus Vistesen (Chief Eurozone Economist)Eurozone
Friday's detailed inflation data in the EZ conformed
to expectations. Headline inflation dipped by 0.1pp, to 1.9%, matching the initial estimate, while core inflation fell to 0.9%, from 1.0% in May, also in line with the first estimate.
Claus Vistesen (Chief Eurozone Economist)Eurozone
Yesterday's euro area trade data from Eurostat were alarmingly poor.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In this Monitor, we are introducing our coverage of the Swiss economy, with a look at the recent Q1 GDP numbers, and an outlook for the rest of the year.
Claus Vistesen (Chief Eurozone Economist)Eurozone
