Top European research Institutes see Eurozone economy robust expansion in H1 2018

Top European research institutions expect the Eurozone economy to mark further robust growth rate in first half of 2018.

According to the Ifo Institute (Munich), KOF (Zurich) and Istat (Rome), robust economic growth of 0.6% can be expected in the first and second quarters of 2018 with marginall slowdown of growth to 0.5% in the third quarter. The key drivers of growth are investments, which will benefit from low interest rates, and rising capacity utilisation rates. Investments will increase by 1.0%, 0.9%t and 0.7% respectively over the first three quarters of 2018. Consumption of private households will also rise by 0.5% initially, and by 0.4% in the third quarter. Inflation will increase by 1.3% by annual comparison to 1.6% in the second quarter and 1.7% in the third quarter.

The risks to the forecast include rising interest rates in terms of investment and the appreciation of the euro for exports, as well as tensions in international trade after the tariff decisions taken by US President Donald Trump. Brexit, Italy’s election results and tensions in the Middle East could also have a negative impact.

The inflation forecast is based on the assumption that the Brent oil price is 66 US dollars per barrel and the EUR/USD exchange rate of 1.2300.