25 Feb 2016
Eurozone: Momentum has slowed and downside risks have risen – Deutsche Bank
Research Team at Deutsche Bank, suggests that the Eurozone has experienced a resilient yet unspectacular cyclical recovery.
Key Quotes
“But momentum has slowed recently and downside risks have risen. The main worry is that if stress in the banking sector continues, this could hurt bank lending and derail domestic demand, which has been the key driver of growth. We have revised down 2016 growth from 1.6 per cent to 1.4 per cent as a result.
Inflation remains low and with downside risks from a relatively strong euro, lower than expected oil prices and slower growth momentum. But the ECB has removed deflation risks.
Political risk remains a concern; the main impact is a slowing of reform momentum, but it is unlikely to have a material negative impact on the recovery. Beyond the cyclical recovery, longer-term structural problems, including the high levels of public debt, continue to weigh on growth.”
Key Quotes
“But momentum has slowed recently and downside risks have risen. The main worry is that if stress in the banking sector continues, this could hurt bank lending and derail domestic demand, which has been the key driver of growth. We have revised down 2016 growth from 1.6 per cent to 1.4 per cent as a result.
Inflation remains low and with downside risks from a relatively strong euro, lower than expected oil prices and slower growth momentum. But the ECB has removed deflation risks.
Political risk remains a concern; the main impact is a slowing of reform momentum, but it is unlikely to have a material negative impact on the recovery. Beyond the cyclical recovery, longer-term structural problems, including the high levels of public debt, continue to weigh on growth.”