Eurozone: GDP likely to grow at 1.9% in 2018 – Danske Bank

Analysts at Danske Bank point out that yesterday, euro area Q3 GDP growth came in at a four-year low of 0.2 % below consensus and their expectations (0.4%).

Key Quotes

“In the absence of a component breakdown, we expect that growth was primarily driven by domestic demand in light of lingering external headwinds on the trade front. In terms of country composition, weaker activity was likely to have been driven primarily by Italy and Germany, and could not be fully compensated for by an acceleration in the French Q3 growth rate.”

“We lower our 2018 euro area GDP growth forecast to 1.9% based on weak data, but we still look for a small rebound in Q4 to 0.4%, primarily on the back of a recovery in German activity as production bottlenecks in the car industry subside.”

“We do not think the data will ring alarm bells at the ECB as growth remains above potential (1.5%), but it strengthens the case for a downward revision of the GDP growth forecasts at the December meeting.”