EUROZONE: Recovery gains impetus, growth of 0.5% in 3Q-4Q

The economic recovery in the Eurozone will gain impetus slightly over the course of the year, Europe’s three leading economics research institutes said on Tuesday.

Economic output is expected to grow by 0.5% in the third and fourth quarters, respectively, following growth of 0.4% in the first and second quarters, according to the Ifo Institute (Munich), Insee (Paris) and Istat (Rome).
The development will mainly be driven by domestic demand. Overall, this will lead to an annual rate of economic growth of 1.4% in 2015, after 0.9% in 2014.
Production will primarily be driven by robust domestic demand from private households, as well as an acceleration in investment. The situation in the labour market will improve gradually and the unemployment rate is expected to fall slowly. This is expected to result in an increase in real income over the course of the year. Together with rising employment, this should facilitate purchasing power gains that will sustain the household consumption dynamic.
Assuming an oil price of $65 per barrel and an exchange rate of 1.12 euros per US dollar, inflation is expected to accelerate somewhat to 0.2% in the second quarter of 2015, and to reach 0.9% by the end of the year. This forecast is based on the assumption that negotiations between the Greek government and its debtors do not comprise the financial stability of the euro countries.