Green shoots are surfacing in the Euro Area. Indeed, for the seventh time in a row, GDP posts positive quarter on quarter (qoq) growth. Q4 2014 was up 1.3 % annual rate after 0.7 %. (Chart 1)

The latest indicators for February 2015 -- the PMIs or the European Commission indices -- are again improving after a soft patch and are pointing to 1.5 % year-on-year growth (Chart 2). Of course, the improvement is not evenly distributed. As far as the big countries are concerned, Germany and Spain are leading the recovery while France and Italy are lagging behind.

The latest developments point to a recovery gaining momentum. The unemployment rate has begun to decrease, the fall in oil prices should boost households’ purchasing power by around 0.6 % of GDP (Chart 3). At the same time, the fall of the euro is strongly stimulating activity (Chart 4). The fiscal restriction being limited this year and next, Eurozone GDP growth should accelerate from 0.9 % in 2014 to 1.6 % in 2015 and to 2.0 % in 2016.

 

 

 

 

The Macro Team

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