Eurozone | Growth in 2020 revised down

Summary

More evident negative effects of worsening global demand and uncertainty on exports and investment explain the downward revision of growth in 2020. Further monetary easing and slightly expansive fiscal policy could help to halt deteriorating confidence and to underpin spending, with increasing divergence across countries.

Key points

• Key points:
• Disappointing hard data in 3Q19 so far, but the slowing growth trend seems to be stabilizing. Exports increased slightly up to August and the deterioration of the industrial output slows.
• MICA-BBVA model now projects Eurozone GDP to slow slightly further to around 0.1% QoQ in 3Q19.
• Growth forecast for 2020 is revised down by 0.4pp to 0.8% driven by more evident negative effects from a worsening global outlook and higher uncertainty on exports and investment.
• Across countries, GDP growth has been significantly revised downwards in Germany and Spain. A more gradual slowdown is expected in France, while Italy’s GDP remains virtually stagnant over the forecast horizon.

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