Eurozone economy supported by growth in France and Italy: GDP update – .

Eurozone economy supported by growth in France and Italy: GDP update – .

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France and Italy drove economic growth in the 19-country euro area in the third quarter after most restrictions related to Covid-19 were suspended.

An increase in consumer spending propelled French production to 3% in the three months to September, beating all but one estimate in a Bloomberg survey. Italy recorded 2.6% growth, supported by industry and services.

Meanwhile, Germany and Spain disappointed with much weaker-than-expected growth. An 11am report is expected to show a 2.1% expansion for the eurozone to 19 countries.

The outlook is uncertain. Persistent supply shortages and transport traffic jams cause factory orders to be canceled or delayed, and soaring inflation threatens to undermine consumption.

The European Central Bank has pushed back market expectations for interest rate hikes next year to counter rising inflation, which President Christine Lagarde says will decline in 2022. The Council governors will receive new forecasts in December, when they plan to decide on the post-pandemic policy path.

Key developments

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German GDP (10h)

German growth barely accelerated in the third quarter. At 1.8%, it remained well below an estimate of 2.2% in a Bloomberg survey.

With its strong focus on manufacturing, Europe’s largest economy has particularly suffered from lack of supply. Growth forecasts for this year have been revised down in recent weeks, although next year’s performance could turn out better if the flow of parts and raw materials picks up.

Service dynamics have also slowed after the initial reopening boom, and rising infections threaten to weigh more heavily on the industry in the coming months.

PIB italien (10h)

The Italian economy extended its recovery into the third quarter and is set to grow by more than 6% this year. Prime Minister Mario Draghi is focusing all his energies on boosting growth in order to help the country manage its massive debt, which is approaching 153.5% this year.

A helping hand will come from more than 200 billion euros ($ 233 billion) in grants and loans from the European Union and the national stimulus fund to be spent on things like infrastructure, health, education. , digitization and green economy initiatives aimed at making the country more modern and efficient.

ECB survey of professional forecasters (10 a.m.)

Respondents to the ECB’s survey of professional forecasters raised their inflation outlook for the period up to 2023, but continue to see a slowdown next year, according to a statement released on Friday. Consumer price growth was 1.9% in 2022 and 1.7% in 2023, while underlying inflationary pressures were expected to increase gradually as the economy recovered.

Spanish GDP (9h)

Spanish production grew only 2% in the third quarter, far less than expected as household consumption fell and local demand recovered slower.

The disappointing results follow a sharp downward revision in the second quarter. This sparked a wave of downgrades from economists who expected Spain to record its fastest growth in more than four decades this year following a travel boom after restrictions against coronaviruses.

The Bank of Spain announced this week that it will cut its growth forecast “considerably” for this year and to a lesser extent than for 2022. A boost could come from tens of billions of euros from the EU targeting reform an economy too dependent on tourism and services, but the ruling coalition is struggling to agree on the main labor and pension reforms needed to unlock the funds.

Austrian GDP (9h)

Austria’s economy grew 3.3% in the three months to September, prolonging a recovery that was bolstered by increased consumer spending after most coronavirus restrictions ended. Momentum in the industry has stagnated, the Austrian Institute for Economic Research said.

French inflation (8:45 a.m.)

France’s inflation rate reached 3.2% in October, its highest level since 2008, as prices for services and energy accelerated. Finance Minister Bruno Le Maire said the surge is temporary and to be expected when the economic recovery is strong.

PIB lituanien (8h11)

Production in the Baltic country stagnated in the third quarter after growing 2% in the previous three months. Industry and retail were among the sectors making a positive contribution to gross domestic product, while agriculture weighed on momentum, the statistics office said.

French GDP (7:30 am CET)

France’s strong rebound – also supported by trade – surprised President Emmanuel Macron’s government at a time when ministers expected to face bankruptcies and massive job losses following the withdrawal of the emergency help.

However, many uncertainties are on the horizon in the second largest economy in the euro area, especially with the elections just six months away. In order to reassure households, the government has undertaken to contain the prices of gas and electricity and to distribute “inflation compensation” checks of 100 euros to nearly 40 million French people.

Meanwhile, manufacturers are suffering from a global supply crunch. Automaker Renault cut its production outlook last week amid a growing chip shortage.

Coming soon (every hour CET)

  • PIB portugais, inflation (10h30)
  • Euro zone GDP, inflation (11h)
  • Italian inflation (11h)

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