Euro area growth could be stronger - SocGen

The 2Q euro area (EA) GDP growth of 2.2% y/y, while unremarkable, is the best in over six years, points out Kit Juckes, Research Analyst at Societe Generale.

Key Quotes

“Surveys suggest growth could be stronger and the softness of credit growth we worried about in 2009-2014 is no longer a barrier to growth. That glosses over the EA’s structural weaknesses until the next downturn and means that regardless of what the ECB didn’t do, the markets will remain confident that they are on track to taper bond purchases and that the tide of monetary policy will go on turning less dovish. Our EUR/USD forecast looks for the McDonald’s Big Mac PPP ‘fair value’ of 1.25 to be reached in a year’s time, from where a steady rise is likely.”