Eurobloc overview – Scotiabank

By FXStreet With the ECB on the radar this week, analysts at Scotiabank offered a comprehensive overview of the EZ.

Key Quotes:

“The euro zone recovery is expected to gain modest momentum, with real GDP growth rising to 1.7% in 2016 and 1.8% in 2017, up from 1.5% last year.

Nevertheless, the region is not immune to the challenging global environment. After being one of last year’s global economic bright spots, the recent softening in key leading indicators, such as PMIs, consumer confidence and business sentiment surveys, suggests that the euro zone economy is succumbing to the slowdown in emerging markets and elevated financial market volatility.

Indeed, euro zone growth has shown signs of moderation as households have pulled back on spending and weaker foreign demand has weighed on exports and industrial production.

Meanwhile, domestic headwinds from the influx of refugees, heightened security amid terrorism concerns, new bank regulations, and the UK’s EU referendum present further downside risks to the regional outlook.

The euro bloc has also slid back into deflation, with the headline HICP print declining to -0.2% y/y in February, from 0.3% in the prior month, largely due to lower oil prices. What is particularly alarming, however, is that core inflation has fallen to its lowest …read more

Source:: FX Street