Intesa Sanpaolo : Despite the recovery of business confidence indices recorded in February, GDP is expected to contract sharply in Germany in the opening quarter of 2021…
Weekly Economic Monitor – 26. Februar 2021
Intesa Sanpaolo – Research Department
after proving more resilient than in the rest of the euro area in the autumn quarter of 2020. The manufacturing sector continues to contribute positively, while the services and retail sectors will be the hardest hit by far by the healthcare restrictions.
We have revised downward the growth projections for the Italian economy in 2021 to 3.7%. However, the 2022-23 projections have been revised upwards.
The week’s market movers
In the euro area , February inflation is expected to prove little changed in the Eurozone (at +0.8% y/y from +0.9% y/y previously), and in Germany (+1.5% y/y from +1.6% y/y), and on the decline in Italy (to 0.3% y/y from 0.7% y/y). The final estimate of PMI surveys for February will confirm the weakness economic activity in most Eurozone countries, once again led by services. Unemployment is expected roughly stable both in Germany and on average in the euro area as a whole, although it could start rising in 2H 2021. January retail sales in the Eurozone are expected weaker, also due to the decline of consumption in Germany, set to continue this month. Also in January, new manufacturing orders in Germany, contrary to sales, should show an improvement. Lastly, the second reading of national accounts data for 4Q in Italy will confirm the contraction of GDP in the autumn months, probably to be followed by only a marginal decline of activity in the winter quarter.
This week, numerous data releases are lined up in the United States, but their reliability will be marred by the wave of adverse weather that has hit most of the country in February. The ISM indices, and the and Employment Report, should report an expansion of activity and of employment, while sending weaker indications than those compatible with the underlying trends, net of the effects of the cold snap. In January, construction spending should continue to grow, and the trade balance is expected to show a modest narrowing of the deficit.
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