Economists Boost Euro-Area Outlook, See Best Year in a Decade

The euro-area economy just got another upgrade, with economists seeing the fastest expansion since before the financial crisis.

In the latest survey by Bloomberg News, gross domestic product is forecast to increase 2.1 percent this year, up 0.1 percentage point compared with the August survey. The revision — the eighth positive reassessment over the past year — comes just over a week since the European Central Bank also issued its own more optimistic assessment, with a forecast of 2.2 percent.

Expansion in the 19-nation economy last hit 2.1 percent in 2010, though it’s not been stronger since 2007. The pace of growth may slow to 1.8 percent next year — though that’s still better than the August prediction — and 1.5 percent in 2019. That would be the weakest pace since 2014.

While economists have regularly upgraded their 2017 outlook for economic growth, they’ve been less optimistic regarding inflation, and that remained the case this month. Looking ahead, consumer prices are seen rising just 1.1 percent in early 2018, before rebounding to 1.6 percent by year’s end and then averaging 1.7 percent in 2019.

Key Takeaways

-Survey of 58 economists conducted from Sept. 8 to Sept. 14
-GDP to grow 2.1% this year, 1.8% in 2018 and 1.5% in 2019
-Chance of a recession happening over the next 12 months is 10 percent, according to 11 respondents
-See graph of 2017 GDP forecast evolution
-HICP to average 1.5% this year, 1.4% in 2018 and 1.7% in 2019
-See graph of inflation forecasts compared to ECB’s 2% target
-ECB refi rate seen at 0.00% by end-4Q17, current rate is 0.00%
-ECB deposit rate seen at -0.40% by end-4Q17, current rate is -0.40%
-First 15 bps hike seen in 1Q19 versus 40bps hike previously expected

Full Survey Results

3Q
4Q
1Q
2Q
3Q
4Q
1Q
AVG.
AVG.
AVG.

2017
2017
2018
2018
2018
2018
2019
2017
2018
2019

GDP QOQ%
0.5%
0.4%
0.4%
0.4%
0.4%
0.4%
0.4%
n/a
n/a
n/a

 Previous survey
0.5%
0.4%
0.4%
0.4%
0.4%
0.4%
0.4%
n/a
n/a
n/a

GDP YOY%
2.2%
2.1%
2.0%
1.7%
1.7%
1.7%
1.6%
2.1%
1.8%
1.5%

 Previous survey
2.1%
2.0%
1.8%
1.7%
1.7%
1.7%
1.7%
2.0%
1.7%
1.5%

Household Cons. YOY%
1.8%
1.7%
1.7%
1.6%
1.6%
1.6%
1.5%
1.7%
1.6%
1.5%

 Previous survey
1.6%
1.6%
1.6%
1.6%
1.5%
1.5%
1.5%
1.6%
1.5%
1.4%

Government Cons. YOY%
1.4%
1.3%
1.3%
1.2%
1.2%
1.1%
1.1%
1.2%
1.3%
1.2%

 Previous Survey
1.2%
1.2%
1.2%
1.2%
1.2%
1.1%
1.2%
1.2%
1.2%
1.2%

Gross FCF YOY%
2.7%
2.3%
3.1%
2.9%
2.8%
2.6%
2.4%
2.8%
3.1%
2.4%

 Previous Survey
3.4%
2.5%
2.9%
2.7%
2.9%
2.8%
2.6%
3.4%
3.0%
2.5%

Imports YOY%
4.6%
3.8%
4.4%
4.2%
4.1%
4.0%
3.1%
4.2%
3.8%
3.4%

 Previous survey
5.4%
3.7%
3.7%
3.8%
4.8%
4.8%
3.3%
4.5%
3.7%
3.4%

Exports YOY%
4.9%
4.4%
3.8%
3.6%
3.7%
3.6%
3.2%
4.5%
3.5%
3.2%

 Previous survey
5.0%
4.1%
3.8%
3.6%
4.2%
4.3%
3.5%
4.4%
3.7%
3.4%

HICP YOY%
1.4%
1.3%
1.1%
1.3%
1.5%
1.6%
1.6%
1.5%
1.4%
1.7%

 Previous survey
1.4%
1.3%
1.2%
1.4%
1.5%
1.6%
1.7%
1.5%
1.4%
1.7%

IP YOY%
2.4%
2.1%
2.4%
1.8%
1.8%
1.8%
1.5%
2.1%
2.0%
1.6%

 Previous survey
2.3%
2.0%
2.3%
2.0%
1.8%
1.7%
1.5%
2.0%
2.0%
1.6%

Unemployment rate
9.1%
9.0%
8.8%
8.7%
8.6%
8.6%
8.4%
9.2%
8.6%
8.2%

 Previous survey
9.1%
9.0%
8.9%
8.8%
8.6%
8.5%
8.4%
9.2%
8.7%
8.1%

Current Acct. % GDP
3.4%
3.0%
3.0%
2.9%
3.2%
2.8%
n/a
3.1%
2.9%
2.7%

 Previous survey
3.5%
3.1%
2.9%
3.3%
3.2%
2.7%
n/a
3.1%
3.0%
2.6%

Budget as a % GDP
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-1.4%
-1.3%
-1.2%

 Previous survey
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-1.4%
-1.4%
-1.2%

3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q

2017
2017
2018
2018
2018
2018
2019
2019
2019
2019

ECB Rate

0.00%
0.00%
0.00%
0.00%
0.00%
0.05%
0.20%
0.25%
0.50%

 Previous survey

0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.25%
0.50%

Deposit Rate

-0.40%
-0.40%
-0.40%
-0.40%
-0.40%
-0.25%
-0.10%
0.00%
0.00%

 Previous survey

-0.40%
-0.40%
-0.40%
-0.40%
-0.40%
0.00%
0.00%
0.10%
0.25%

Three-Month Euribor
-0.33%
-0.33%
-0.30%
-0.30%
-0.30%
-0.25%
-0.10%
0.08%
0.15%
0.20%

 Previous survey
-0.33%
-0.33%
-0.30%
-0.30%
-0.30%
-0.27%
-0.18%
-0.05%
0.11%
0.30%

OCT. 26
DEC. 14
JAN. 25
MAR. 8
APR. 26
JUNE 14
JULY 26
SEPT. 13
OCT. 25
DEC. 13

2017
2017
2018
2018
2018
2018
2018
2018
2018
2018

ECB Rate (by date)
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%

 Previous survey
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
n/a

NOTE: All figures are expressed as of the end of the quarter except for GDP.
Source: Bloomberg

Source.