BNP skriver:
Eurozone: No growth in Q3?
Eurozone GDP growth will be today’s focus. Consensus is expecting a tiny 0.1% q/q expansion in Q3, but we are a little more sceptical and think the eurozone did not manage to grow in Q3 at all. Consumer spending looks relatively robust (retail sales grew 0.2% q/q), but industrial production fell 0.4% q/q. Worth around 20% of total output, the latter will limit total GDP growth. Geopolitical uncertainty, ie the Russian conflict, is likely to have played a very important role in the eurozone’s slowing growth momentum, affecting investment spending in particular. Annual GDP growth is expected to have slowed to 0.6% y/y in Q3, from 1% at the beginning of 2014.
Data flow at the beginning of Q4 was mixed. While the markets were volatile, sentiment stabilised in October. Although this is a good sign, their levels still suggest more of the same ‘zero-ish’ growth dynamics to follow in Q4. At this stage, it looks like we will have to wait until early 2015 to see a gradual return to potential growth (of just below 1% per year).
In Germany and Italy, geopolitics (ie, the Russian effect) might have been a common factor in their weakening growth momentum since early 2014. These two countries have export exposure to Russia at about 3% of total exports, higher than France and Spain. Putting countryspecific factors (such as weather effects and domestic fundamentals) aside, the two countries posted softer growth in Q2 than in previous quarters (-0.2% q/q), and are expected to have contracted again to the tune of 0.1% q/q in Q3. In Italy, the pronounced 0.9% q/q decline in industrial production is a risk for a slightly softer outcome. Meanwhile, France is a slightly different (more domestic) story. We expect no growth for a third consecutive quarter, again below consensus expectations and the INSEE forecast (0.1% q/q),
