EMU kicks off 2017 with strong growth

The Eurozone economy has started 2017 on a strong footing. EMU economic growth rose in Q1 2017, so the first estimate reveals, by +0.5 percent on the prior quarter. In other words, the momentum has been maintained compared to Q4 2016. Details of the components of economic growth were not published.

Some EMU member states have also released initial figures on the trend for gross domestic product (GDP). Spain recorded an increase of +0.8 percent while Belgium and Austria both achieved robust quarterly growth rates of +0.5 percent. Things advanced slightly slower in France, where the increase was +0.3 percent. Details from France and Austria show that in both cases precisely gross investments in fixed assets have surged.

The leading indicators published had already suggested that the EMU would put in a robust performance in the first quarter. Sentiment among the European purchasing managers improved in the first quarter from one month to the next and in April reached a new long-term peak, with the level hitting the highest point in 72 months. Both service providers and industrial corporations reported rosier sentiment.

In other words, the economic prospects for the Eurozone were again clearly upbeat in early May. This is borne out by the DZ BANK Euro-Indikator we compute. While in the first quarter of 2017 the indicator tended to suggest restrained momentum at a high level, the DZ BANK Euro-Indikator has of late improved significantly, mainly driven by more favourable data from European industry and a more positive underlying sentiment among private households.

In this light, we continue to forecast an economic growth rate of 1.6 percent for the current year, with the momentum in coming quarters presumably only lagging slightly behind that in the first quarter.

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