13 May 2015
Eurozone Q1 growth unlikely to be sustained ahead – BBH
FXStreet (Barcelona) - Reviewing the Euroarea GDP release, the Brown Brothers Harriman Team view that the faster than US growth seen in Q1 is unlikely to be sustained ahead.
Key Quotes
“The eurozone grew 0.4% in Q1 after a 0.3% expansion in Q4 14. This was in line with expectations. The country breakdown was surprising. Germany grew by 0.3%. The consensus was for 0.5% after 0.7% in Q4 14.”
“France surprised with a 0.6% expansion. The market expected a 0.4% gain after stagnating in Q4 (initially up 0.1%). Italy also bettered expectations, expanding by 0.3% instead of 0.2%. This was only the second quarter since Q2 11 that the Italian economy has grown. The weak euro, lower interest rates, and the fall in oil prices helped fuel the expansion.”
“The fact that the France grew faster than Germany seems a bit of a fluke. It appears the French growth may have come via inventory growth rather than final demand. In any event, no one is bound to conclude that the outperformance of France heralds a change in relative strength. The same may be said for the US.”
“The eurozone grew faster in Q1 than the US, but this is unlikely to be sustained, even if it is repeated to a lesser extent in Q2. Consider than on a year-over-year basis, the US economy grew by 3% in Q1 15. The eurozone grew 1%.”
Key Quotes
“The eurozone grew 0.4% in Q1 after a 0.3% expansion in Q4 14. This was in line with expectations. The country breakdown was surprising. Germany grew by 0.3%. The consensus was for 0.5% after 0.7% in Q4 14.”
“France surprised with a 0.6% expansion. The market expected a 0.4% gain after stagnating in Q4 (initially up 0.1%). Italy also bettered expectations, expanding by 0.3% instead of 0.2%. This was only the second quarter since Q2 11 that the Italian economy has grown. The weak euro, lower interest rates, and the fall in oil prices helped fuel the expansion.”
“The fact that the France grew faster than Germany seems a bit of a fluke. It appears the French growth may have come via inventory growth rather than final demand. In any event, no one is bound to conclude that the outperformance of France heralds a change in relative strength. The same may be said for the US.”
“The eurozone grew faster in Q1 than the US, but this is unlikely to be sustained, even if it is repeated to a lesser extent in Q2. Consider than on a year-over-year basis, the US economy grew by 3% in Q1 15. The eurozone grew 1%.”