We expect most euro-area periphery countries to continue to show positive GDP growth. Survey data are at relatively high levels and the improvement is also seen in hard data, where industrial production is slowly increasing while retail sales have stabilised. Hence data from the periphery is stronger than it has been for a long time.
There is still room for further progress in domestic demand. We expect private consumption to improve further as indicated by the increase in consumer confidence. Moreover, the return of business confidence is expected to result in pent-up demand in investments being unleashed.
Peripheral sovereign yields have continued their good performance and most 10Y yields remain around historical lows. Greek yields have also performed well and for the first time in four years Greece came to the international capital markets with the issuance of a 5Y bond. Portugal has also held its first regular 10Y government bond auction since 2011. The auction resulted in better-than-expected yield and it looks like the country will make a clean exit from the Troika programme.
To Read the Entire Report Please Click on the pdf File Below