EcoWeek

How many swallows make a spring?

Eco week 20-04 // 31 January 2020  
economic-research.bnpparibas.com  
2
EDITORIAL  
HOW MANY SWALLOWS MAKE A SPRING?  
Recent survey data have picked up, in particular in the manufacturing sector and in terms of export orders. The  
European Commission noted a marked increase of economic sentiment in the European Union, the eurozone, Germany  
and France in January, after substantial weakness in Q4. Although economists expect a pick-up in growth in the US  
as the year progresses, the dispersion is very wide. This means that the median forecast will inspire less confidence  
than if the level of disagreement amongst forecasters would be lower.  
Will the global economy have an early spring this year? Popular wis- recent year - slowed noticeably, despite a tight labour market. Also  
dom has it that one swallow does not make a spring but economists worth noting is that the FOMC now considers growth to be “moderate”,  
disagree on how many good data are needed to call a change of season. coming from “strong”. The IMF, in its updated projections, also remains  
cautious because “few signs are yet visible in global macroeconomic  
data”.  
In general, recent survey data have improved, in particular in the  
manufacturing sector and in terms of export orders. Eurozone data  
have tended to surprise to the upside lately, after substantial weakness All in all, survey data have improved and it is now a matter seeing this  
in Q4, which translated into a very meagre growth performance in the transmitted into hard data like activity or spending. This in turn would  
Eurozone (0.1%) and even a small contraction in France (-0.1%). For support confidence and lead to a self-reinforcing dynamic. With the  
January, the European Commission noted a marked increase of economic disruption caused by the outbreak of the coronavirus epidemic, more  
sentiment in the European Union and the eurozone. In the latter case, patience will be needed before we reach that stage.  
this can be largely attributed to positive developments in the industry  
and construction sectors, whilst confidence among consumers and in  
the services was stable. Strong increases of economic sentiment were  
registered in Germany and France. The purchasing managers’ indices  
in Japan and the UK also rebounded in January.  
William De Vijlder  
US: DISTRIBUTIONS OF INDIVIDUAL FORECASTS OF REAL GDP, Y/Y, %  
Number of participants  
Judging by the Bloomberg consensus forecasts, economists believe that  
the year-over-year pace of growth in the OECD countries will pick up  
somewhat in the coming quarters. This also corresponds to the profile  
of our own forecasts. Concretely speaking, for the US, comparing the  
distribution of the individual growth forecasts for the current quarter  
with those for the fourth quarter, one observes a shift to the right. A  
similar observation can be made for the eurozone. Consequently, the  
median growth forecast accelerates from 1.6% to 1.9% in the US. The  
equivalent numbers for the eurozone are 0.9% and 1.1%. Interestingly  
and contrary to the eurozone, the left tail of the distribution of US  
fourth quarter forecasts shifts to the left, into negative growth territo-  
ry. A wide distribution reflects a considerable degree of disagreement  
amongst forecasters which in turn may push their audiences - business  
people, households, etc. - to show some reserve about the projection  
that better times will be coming: a median forecast with a wide disper-  
sion will inspire less confidence than if the dispersion would be small.  
The first estimate of US GDP growth for the fourth quarter will not  
change that assessment. At 2.1%, the annualised quarter-over-quarter  
growth was the same as the previous three-month period but person-  
al consumption expenditures – which have been a pillar of growth in  
20  
18  
16  
14  
1
1
Q1' 2020  
Q4' 2020  
Q1' 2020 Q4' 2020  
2
0
8
6
4
2
0
Median  
1.6  
3.0  
0.5  
1.9  
2.8  
Maximum  
Minimum  
-1.4  
-
1,4 -1,0 -0,6 -0,2 0,2 0,6 1,0 1,4 1,8 2,2 2,6 3,0  
Real GDP, y/y, %  
SOURCE: BLOOMBERG, BNP PARIBAS  
The improvement of economic survey data is continuing and  
broadening. However, looking at the US, the wide dispersion  
of forecasts for this year reflects a considerable degree of  
disagreement. This can push companies to adopt a wait-and-  
see attitude in their investment decisions.  
The bank  
for a changing  
world  
QUI SOMMES-NOUS ? Trois équipes d'économistes (économies OCDE, économies émergentes et risque pays, économie bancaire) forment la Direction des Etudes Economiques de BNP Paribas.
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