Eurozone: Strong growth, but no longer accelerating – ING

In 2017, the Eurozone surprised the markets to the point that expectations for 2018 were scaled up continually, but news since the beginning of the year has brought back some realism, according to Peter Vanden Houte, Chief Economist at ING.

Key Quotes

“Peak growth for the Eurozone now seems behind us, though the first quarter could have been slightly stronger if there hadn’t been a number of one-off effects. At the same time, core inflation has unexpectedly fallen back to only 0.7%, which increases the probability that monetary policy will stay loose for longer than markets had anticipated.”

“First quarter GDP growth came in at 0.4% quarter-on-quarter, a clear slowdown from the 0.7% pace seen in the last quarter of 2017. There have certainly been one-off effects dragging down growth. An unusual cold spell in March might have affected construction activity negatively in the first quarter, while the flu epidemic probably also hurt activity. Apart from that, strikes in Germany and the timing of the Easter holiday had a dampening effect.”