Rolling coverage of the latest economic and financial news
- Latest: Eurozone shrank 0.6% in January-March, meaning double-dip recession
- Germany shrank 1.7% in Q1
- Italian GDP down 0.4%
- Spain’s GDP fell 0.5% in January-March
- Intro: French GDP grew 0.4% in first quarter of 2021
- Yesterday, US GDP grew by 1.6% (6.4% annualised)
Looking back at the eurozone recession….Shweta Singh of TS Lombard has predicted that the downturn has bottomed out this month, meaning a recovery can begin in May.
She points out that Europe has suffered a sharp downturn from the pandemic:
The drop in economic activity last quarter came on the back of surging new infections and stricter restrictions. With real GDP 5.5% below the pre-pandemic level, EA output losses been some of the largest amongst developed markets.
The decline in economic activity was the steepest in Germany, falling by 1.7% in Q1.
Following a bleak start to the year, the euro area will (re)enter a recovery phase from next month as the pace of vaccination gathers pace and restrictions are dialled back. Pent-up household demand will boost growth as consumers tap into their forced savings.
Tourism should offer a decent tailwind. Fiscal spill overs from a generous fiscal package in the US will also offer support as will the Recovery Fund, which should kick-start later this year. Export orders are buoyant, suggesting more room for growth in manufacturing and exports.
Yet more evidence that the US economy is strengthening: consumer confidence has jumped this month to a pandemic high, according to the University of Michigan’s survey:
.@umisr's monthly Consumer Sentiment Index rose to 88.3 in April 2021, up from 84.9 in March & well above last April’s 71.8—the best reading since the start of the pandemic.
The renewed confidence is due in part to record federal stimulus spending.https://t.co/wLGz2bhFyZ
Uni Michigan #Consumer Sentiment index +3.4pt to 88.3 in April
Current Conditions: 97.2 (+4.2pt)
Consumer Expectations: 79.7 (+3pt)
"Growing sense that upward momentum in jobs & incomes will persist… record stimulus spending & positive impact from #vaccinations" Curtin pic.twitter.com/CCJGYjdqDX
