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On the Same Theme

Pickup in economic activity in Q1 2019 5/10/2019
Most leading economic indicators are in line, or even above, expectations. Activity in the manufacturing sector remains subdued, the Purchasing Managers Index (PMI) reaching only 47.9 in April. This poor performance is partially offset by the resilience of the PMI Services Index which is below its long-term average but still well above the 50 threshold (52.8 in April).
Eurozone convergence: Where do things stand today? 4/30/2019
The economic convergence of member states lies at the heart of thjavascript:void('Automatique')e initial project to create the eurozone, but it has followed a jagged path over the past twenty years. Convergence is a multifaceted concept that covers not only the criteria stipulated in the Maastricht Treaty but also growth dynamics and income dispersion. In the period before the Great Financial Crisis, nominal convergence was relatively complete, but progress towards real convergence was much more mixed. There are several major obstacles to a sustainable convergence within the European Monetary Union, including the lack of eurozone’s optimality, possibility of currency devaluations and macroeconomic stabilisation mechanisms.
ECB: easing of inflation raises pressure 4/19/2019
The pass-through of wage growth to prices is stronger and faster when inflation is higher to start with. The low inflation in the Eurozone has slowed down the transmission. The considerable growth slowdown, on the back of adverse foreign demand and uncertainty shocks, impairs this process even more. This raises pressure on the ECB to take action in order to dislodge core inflation, which remains stuck well below its objective
External dampers, internal hopes 4/19/2019
The eurozone’s manufacturing sector has been hard hit by the decline in foreign trade and persistently high uncertainty. Very open internationally, the eurozone is sensitive to global cyclical slowdowns. Internal macroeconomic fundamentals are still solid, and the rally in the services sector is showing resilience. The ECB has taken note of the longer than expected slowdown, and has opted once again for longer-term refinancing operations (TLTRO). Numerous risks still cloud the forecast horizon, which could darken rather quickly if any of these risks were to materialise.
Credit impulse 4/12/2019
After contracting in January, the credit impulse picked up very slightly in February 2019. This trend is due almost exclusively to lending to non-financial companies, whereas the credit impulse has remained relatively flat for households since November 2018. Demand is expected to increase in second-quarter 2019 for all loan categories, stimulated by the easing of financing conditions, except for home loans, for which lending conditions are expected to tighten slightly.
Convergence in the euro area : A mixed picture 4/8/2019
Convergence is all about seeing if economies are narrowing the gaps between them on a macroeconomic level. This process in the euro area went through two different periods. Before the crisis, the economic convergence seemed to be on track. Since then, the picture is more mixed.
Eurozone growth: Some hopeful signs 3/29/2019
After last week’s poor flash PMIs, data published this week show a mixed picture. The European Commission’s Economic Sentiment Index continues to decline in a large number of countries and for the eurozone as a whole as well. IFO data for Germany show an improvement in the overall climate though manufacturing continues to go down. INSEE data for France show a stabilisation or even some modest improvement. All in all there are some hopeful signs but it would be premature to conclude that the growth slowdown is about to end. April data will be particularly important.
Further deterioration in manufacturing sector 3/22/2019
The latest economic data are globally in line with, or even above, expectations. Some indicators remain at a high level compared to their long-term average. The further and significant deterioration in manufacturing activity draws our attention.
The ECB foresees less growth and extends monetary stimulus 3/8/2019
The ECB sharply lowered its 2019 growth forecast. Inflation is also expected to be milder over the entire forecast horizon. ECB president Mario Draghi noted that uncertainty was particularly high, but said that the vibrant labour market was supporting economic activity. Key rates would not be raised in 2019. Another round of targeted longer-term refinancing operations (TLTRO), with a maturity of 2 years each, would be launched starting in September 2019 and ending in March 2021.
What does M1 growth tell us about the Eurozone growth outlook? 3/7/2019
Academic research shows that inflation-adjusted money supply growth (M1) is a very good leading indicator of real GDP growth in the Eurozone. The lead time is about 9 months. After having slowed down for several months, real M1 growth has recently stabilised. This provides some hope for a subsequent stabilisation of Eurozone growth as well.

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