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Weekly Economic Monitor – 24. April 2020

Intesa Sanpaolo – Research Department


The European Council has also decided to keep working on the Recovery Fund. The issues to solve are serious and intricate, therefore the fund is unlikely to become operational soon.

No new measures are expected to be put in place at the ECB Governing Council meeting on 30 April. Over the past few weeks, following the expansion of the asset purchase programmes, focus has shifted to protection of the mass of guarantees required to supply liquidity, that have also been shielded from possible rating actions.

The week’s market movers

This week, the Eurozone calendar of events will include crucial data releases to start drawing a tangible picture of the extent of the epidemic’s impact on national economies. The advance estimate of Eurozone GDP could point to a -3.8% q/q (3.8% y/y) plunge from 0.1% q/q; in France, GDP is expected to incur a sharper contraction (-6% q/q from -0.1% q/q), as is also the case in Italy (-5.4% q/q from -0.3% q/q) and in Spain (to -4.9% q/q from +0.4% q/q).

The April ECB meeting will also be important, although it is expected to prove interlocutory.

Advance April inflation estimates are also due out, and in the Eurozone should outline a new slowdown, to 0.2% y/y from 0.7% y/y previously; in France, inflation is expected to slow by a further five tenths, to 0.3% from 0.8%, as opposed to a decline in Italy into negative territory, to -0.5% from +0.1%. Unemployment in March is forecast at 7.5% in the Eurozone, and on the rise by three tenths in Italy to 10.0%.

This week a host of data releases are lined up in the United States .

The FOMC meeting is not expected to bring significant changes, with the Committee still reluctant to provide indications on the growth outlook, but still explicit in guaranteeing that all the tools available will be used to support credit and the economy. New jobless claims are forecast at just under 5 million, fuelled by the newly unemployed and by those who failed to apply for unemployment benefits over the previous weeks. Among April data, consumer confidence and the manufacturing ISM should correct sharply. For what concerns March, construction spending, and personal spending and income, are forecast negative. The advance estimate of 1Q GDP should point to a decline of close to -4% q/q ann.


Appendix
Analyst Certification

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Important Disclosures
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Source: BONDWorld