Eurozone: Resilient growth outlook – Deutsche Bank

The Eurozone growth outlook has proved more resilient than expected, and as a result analysts at Deutsche Bank have revised up their forecasts.

Key Quotes

“Political risk has been less of a drag on Eurozone activity than we had expected

− We did not expect political risk to materialise, but saw risk of uncertainty weighing on activity – this has not been significant

− Political uncertainty did not translate into higher cost of financing, partly thanks to ECB policy”

“We raised our growth forecasts across the region and expect growth to continue above trend

− Forecast growth in line with consensus around 1.7% for 2017-18

− Data signal growth at 2%, with surveys implying growth closer to 3%

− Large upward revisions for France, Italy

− Intervention to resolve ailing banks in Veneto is positive and removes some systemic risk in Italy”

“On the downside, improved growth remains mostly cyclical, not structural

− Growth supported by pent-up corporate sector demand, looser fiscal stance, euro depreciation − Faster sustainable growth unlikely without a step-up in structural reform”