Today, the ECB will release a statement about the primary factors affecting Europe’s economy. The press conference is the primary information source of monetary policy that investors have to draw upon. It will encompass details about interest rates decisions, and refers to the overall health of Europe’s economy as well as inflation expectations.
There is usually a lot of market volatility as the central bank’s president Draghi predicts a map for future interest rate changes.
Navigating Europe out of the global risks and tensions both domestic and global, has been a challenging task. European recovery is set to continue this year and the next. For the first time in nearly a decade, Europe’s member states’ outlook is bright. However, Europe is not without uncertainty.
On paper, Europe’s growth is on track. GDP is on the uptick quarter after quarter, employment is growing at a vigorous pace and investment is expanding, albeit it mildly.
Due to the expectations of higher fiscal stimulus from the US, other developed nations around the world have increased their growth prospects.
The ECB have predicted around a 1.6% increase in GDP growth for 2017.
Inflation in the eurozone is also on the rise. Thanks to the recent increase in energy prices, inflation is forecasted to reach just below the 2% target mark over the medium term. Core inflation measures, which omit fluctuations in energy and food prices, is on a gentler slope, most importantly however, it’s advancing in the right direction – upwards.
One of the main growth drivers – private consumption – is posed to slow down this year and in 2018. Thanks to an uptick in inflation which limits the individual’s purchasing power, private consumption will veer lower.
The recovery of the global economy as well as low financing costs will continue to support investments throughout the euro-zone, both privately and publicly. Investment is forecasted to grow by 2.9% in 2017.
One of the major impacts the economic recovery has had can be seen in the labour market. The unemployment rate is set to decline further this year, to 9.6%.
Risks still lie ahead for Europe however. The lack of details from the Trump administration is wearing on investors and turning equity markets bearish. If traders are unable to gauge the fiscal stimulus in the market, economic forecasts become limited.