Euro zone: Darkening growth outlook but norecession
13 OCTOBER 2011
was published on August 30, euro zone data have, with a fewexceptions, been weaker than expected. Indicators (Economic Sentiment Indicator, PMIcomposite) point to a marked slowdown in economic growth.
Consequently, GDP forecasts for the euro zone have been revised downwards. GDP isexpected to grow 1.7% in 2011, 0.5% in 2012 and 1.3% in 2013.
A solution to the financial crisis is not yet in sight, which implies substantial risk of arecession. However, the statement by Merkel/Sarkozy presented last weekend that a planfor bank recapitalisation and a solution to the Greek crisis will be presented in time forthe G20-meeting on November 3 is mildly encouraging.
Inflation rose unexpectedly in September to 3.0% from 2.5% from the preceding monthdue to temporary effects. However, inflation is expected to recede as a result ofdecreasing capacity utilization and slowing growth. Inflation is expected to be below theECB target in 2012 and 2013.
SEB Economic Research
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2010 2011 2012 2013
GDP* 1.7 1.7 0.5 1.3Unemployment
10.1 9.9 9.8 9.6Inflation* 1.6 2.6 1.5 1.6Government deficit*** -6.0 -4.4 -3.5 -2.7
* Percentage change, ** Per cent of labour force, *** Per cent of GDPSource: SEB