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15 May 2013
Forex Flash: EU GDP in focus today - DBS Group
FXstreet.com (Barcelona) - DBS Group analysts note that advance estimates of 1Q13 EU GDP growth are on the tap today and the headline could register 0.8% decline YoY (vs-0.9% in 4Q12).
They add that on sequential basis, this translates to nil growth on the quarter and with the zone-wide unemployment rate hitting record highs and confidence indices easing off in the first quarter this year, the external sector looks set to pull bulk of the weight of the economy. Further, they comment that the anticipated 16% QoQ pick-up in the merchandise trade surplus should improve the net exports position, and even though exports recovered slightly in1Q, imports eased by a bigger margin, thus improving the balance.
In the meantime, they add that most indicators for the domestic demand sector remained soft, with industrial production barely changed on the quarter and credit demand failing to pick pace despite ample liquidity in the markets. The string of weak data meanwhile, prompted the ECB to lower rates earlier this month, though with both ends of the credit channel – banks as well and households/ businesses – in deleveraging mode, they note that the reduction in the main refinancing rate is unlikely to provide any fillip to the real economies. They write, “On the brighter side, after a single-minded focus on fiscal austerity, the authorities appear to be loosening up the stranglehold, which we reckon should help lift the member economies from the present dire straits. Nonetheless, GDP growth this year is set to contract at possibly the same pace as last year, at the least.”
They add that on sequential basis, this translates to nil growth on the quarter and with the zone-wide unemployment rate hitting record highs and confidence indices easing off in the first quarter this year, the external sector looks set to pull bulk of the weight of the economy. Further, they comment that the anticipated 16% QoQ pick-up in the merchandise trade surplus should improve the net exports position, and even though exports recovered slightly in1Q, imports eased by a bigger margin, thus improving the balance.
In the meantime, they add that most indicators for the domestic demand sector remained soft, with industrial production barely changed on the quarter and credit demand failing to pick pace despite ample liquidity in the markets. The string of weak data meanwhile, prompted the ECB to lower rates earlier this month, though with both ends of the credit channel – banks as well and households/ businesses – in deleveraging mode, they note that the reduction in the main refinancing rate is unlikely to provide any fillip to the real economies. They write, “On the brighter side, after a single-minded focus on fiscal austerity, the authorities appear to be loosening up the stranglehold, which we reckon should help lift the member economies from the present dire straits. Nonetheless, GDP growth this year is set to contract at possibly the same pace as last year, at the least.”