| Euro area Q3 GDP: Confirmed 0.2% q/q rise supported by domestic and external demand |
| 06.12.11 13:09 | |
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As was widely expected by both ourselves and the market, the second estimate of euro area Q3 GDP confirmed the flash estimate of +0.2% q/q. Outside of the revisions made in the headline quarterly change of GDP in Finland, Slovakia and Cyprus, the main interest in this release is the first expenditure breakdown of Q3 GDP for the euro area. Coming close to our expectations, total private consumption in the euro area rose by 0.3% q/q (BC: +0.4% q/q), although the Q2 print was revised severely down to -0.5% q/q (-0.2% q/q previously estimated - Q4 2010 and Q1 2011 0.1pp revisions cancelled each other out). Government final consumption expenditure remained unchanged in Q3 (BC: +0.1% q/q). Growing by 0.1% q/q, GFCF was slightly stronger than our expectations (BC: +0.0% q/q). Inventories shaved 0.2pp of growth (BC: -0.1pp), after rising by 0.1pp in the last three quarters. On the external demand side, imports rebounded more vigorously (from +0.3% q/q to +1.1% q/q in Q3) than exports (from +1.1% q/q to +1.5% q/q in Q3). As a result, the contribution from net trade declined - although remained positive - from 0.4pp in Q2 (revised up from 0.2pp) to 0.2pp in Q3 (BC: 0.1pp). Now looking at Q4, we expect that the bulk of the downward adjustment should come from domestic demand, with notably private consumption edging down by 0.1% q/q due to a rise of the inflation rate from 2.7% y/y to +3.0% y/y. Consumer purchasing power should also be constrained as the unemployment rate is to increase its pace of deterioration, edging up by 0.2pp to 10.3% in Q4 after +0.1pp to 10.1% in Q3. In such a challenging environment, having little certainty about the future, we should also see a rise in the savings rate. We see otherwise investment falling by 0.9% q/q in Q4 from +0.1% q/q as low business confidence, a dampened outlook as well as increasingly difficult financing conditions should incite companies to cancel (or at least just delay) their investment decisions. source: BarCap |
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