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Intesa Sanpaolo : The Eurozone GDP contracted by around 2%

Intesa Sanpaolo : In light of German data for 2020, published on Thursday, it seems likely that Eurozone GDP contracted by around 2% in the year.

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Weekly Economic Monitor – 15. January 2021

Intesa Sanpaolo – Research Department


The extension of the restrictive measures implies a worsening of growth forecasts in the opening quarter of the year, which risk being flat, and an improvement of estimates for 2Q.

United States: increasingly close to the new Roaring Twenties. Biden presented the guidelines for his plan to tackle the economic and health emergencies, with measures for 1.9 trillion dollars to be financed entirely with the deficit. Time is of the essence: the new administration will have to find a strategy for the rapid approval of the most urgent measures, perhaps with bipartisan support, and to calibrate the efficient use of the reconciliation procedure.

The week’s market movers

In the euro area , the round of January confidence surveys (PMIs and consumer confidence index for the Eurozone, the German ZEW, and the French INSEE) should outline weak economic activity in most euro area countries, dragged downwards once again by services. The second estimate of December consumer prices should confirm the flash reading, with annual inflation stable in the Eurozone (-0.3%), in Germany (-0.7%), and in Italy as well (-0.3%).

Only a few noteworthy data releases are scheduled this week in the United States , and focus will be on the inauguration day of President Biden on 20 January. For what concerns data, January flash PMIs should confirm the pickup of activity across sectors, albeit with signs of a slowdown of growth in the services sector, due to the worsening of the health picture. The Philadelphia Fed index for January should also outline ongoing growth in manufacturing. Existing home sales and housing starts in December should signal a slowdown of the uptrend, due to supply shortages and higher rates and prices.

 


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