- According to survey data, economic activity seems to be holding up well in the year-end period. Even so, growth is likely to slow in 2017.
- With monetary policy overburdened, fiscal policy has once again become the focus of attention.
- The European Commission is arguing for veritable policy coordination to orchestrate fiscal expansion at the eurozone level of about half a point of GDP next year.
- In the short term, the member countries with fiscal manoeuvring room are likely to turn a deaf ear, while the Commission will continue to be lenient with those in tighter situations.
The economic recovery is continuing in the eurozone, albeit at a very feeble pace. The breakdown of detailed Q3 national accounts confirms that GDP rose only 0.3% q/q in Q3, and held to a surprisingly stable cruising speed of 1.7% y/y 1 . Household consumption held fairly firm in Q3 (at 0.3% q/q), while private investment and foreign trade both eased up during the summer months (+0.1% to 0.2%) after a strong Q2 rebound (both up 1.2% q/q).
The most recent survey data suggest that the economy is still going strong in the year-end period, and has even accelerated. Purchasing manager surveys signal solid growth in activity in November, probably in line with a slight acceleration in Q4 GDP, to nearly 0.4% q/q. The surveys also suggest stronger employment trends and sales pricing pressures, which are signs of a consolidating recovery. This tendency is confirmed by the European Commission’s aggregated survey data, which are less volatile, with confidence indicators trending upwards in recent months in all sectors of activity.
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by Frédérique CERISIER