Growth of the Euro Economy Will Plateau
Economic growth in the euro area will level off in the fourth quarter, following a massive recovery in the third quarter. This is the consensus of three research institutes: ifo in Munich, Istat in Rome and KOF. However, reliable prognoses are difficult to make in the current environment because nobody knows how infection rates will develop, when a vaccine will become available, and what impact economic policy will have.
The institutes are forecasting growth of only 2.2 percent quarter over quarter for the fourth quarter, following growth of 8.2 percent in the third quarter and of minus 11.8 percent in the second. For 2020 as a whole, the institutes expect economic output to shrink by 8.0 percent, but are forecasting quarter-over-quarter growth of 1.5 percent for the first quarter of 2021.
For the current third quarter, all key figures are in positive territory: industrial production is set to grow by 15.2 percent, private consumption by 9.2 percent, and investment by 10.2 percent quarter over quarter. After that, all growth rates will flatten out again significantly, which means that the year as a whole will end up deep in the red.
The inflation rate is hovering around zero. The forecast is based on an oil price of USD 43 per barrel for Brent crude and a EUR/USD exchange rate of 1.18.
Eurozone Economic Outlook
This quarterly publication is prepared jointly by the German external page ifo Institute, the KOF Swiss Economic Institute, and the Italian external page Istat Institute. The forecast results are based on consensus estimates building on common macroeconomic forecast methods by the three institutes. Download Details (PDF, 716 KB) and graphs can be found in the right column.
Contact
KOF Konjunkturforschungsstelle
Leonhardstrasse 21
8092
Zürich
Switzerland