European politics to shape 2017 – Commerzbank

Analysts at Commerzbank suggest that the major challenges for the euro area in the next 12 months are political.

Key Quotes

“2017 elections could rattle the political landscape. In the Netherlands, the EUsceptic PVV is leading in the polls for the March general election. In France, polls suggest that euro-sceptic Marine Le Pen has a good chance of making it to the second round of the presidential elections in spring 2017, but it appears unlikely that she will win. In Germany, polls indicate greater fragmentation of the parliament, with the Grand coalition only just keeping its majority.” 

“Leading indicators for euro area growth have recently been more upbeat. The manufacturing PMI climbed to 53.7, its highest level since January 2014. The services PMI climbed as well and is now back at the levels seen at the beginning of the year. Q4 growth could well exceed our economists’ forecast of 0.4% q/q. For 2017, they expect the moderate growth of previous years to continue, as growth in Italy and France should remain below the euro area average – and given the area’s still-high debt levels.”