Economic Quarterly Report Dutch version
We expect the coronavirus to pull the Eurozone economy into a recession. For the year 2020 growth is projected to fall to around 0.2%. Yet a worse-case scenario is now definitely thinkable as well. The Italian and German economy will shrink this year.
The Phase 1 trade deal signed by the US and China in January 2020 has created a temporary but unstable equilibrium. The deal could still collapse and a re-acceleration of trade tensions in 2020 remains our base scenario.
Against a backdrop of increasing talk about a new Eurozone recession, we first take a deep dive into the historical data. We show that since the 1960s there have basically been two types of recessions: common Eurozone recessions and idiosyncratic (country specific) recessions.
Economic Quarterly Report
Het optimisme in de financiële markten is in onze ogen niet houdbaar en wij zien weer lagere rentes in de loop van 2020. Terwijl het Britse pond het meeste positieve nieuws wel heeft verwerkt, blijft de dollar voorlopig sterk. Fed renteverlagingen zullen uiteindelijk wel op de dollar gaan wegen.
Infographic bij het Economisch Kwartaalbericht van december 2019.
Soon, President Trump will announce what to do with tariffs on EU cars. We think he will not hike tariffs just yet, but will keep the tariff threat alive. Within the EU, the German and Hungarian economy are most vulnerable to higher car tariffs in the US.
Against the backdrop of limits to monetary policy, we investigate the issues at stake if budgetary policy were to take over the role of stimulus provider. Things have not been made easier by the EP election results, but we do see a few ways out.
GDP of the Eurozone grew with 0.2% in the 4th quarter. France and Spain performed better than expected, but Italy entered a recession with two quarters of negative growth rates.
The disappointing recovery of the German car sector, the yellow vests in France and slowing external demand lead to a downward revision of our growth figures for 2018Q4 and 2019Q1.
In many Eurozone countries, private sector debt has decreased in recent years and so has the vulnerability of the private sector to higher interest rates. Yet in many countries debt remains high and in several countries vulnerabilities are still present.
Economic Comment Dutch version
Despite deleveraging in recent years, private sector debt remains high in many Eurozone countries. The private sector in Cyprus, Greece, Ireland, Portugal, Spain, Finland and Luxembourg is most vulnerable to higher interest rates.