Europe Economy 4Q19: Momentum to ease
In 2Q19, the Eurozone economy expanded at 0.2% q/q, half the pace of 1Q19. Germany emerged as the biggest drag with a contraction of -0.1% q/q while other core economies decelerated from a more resilient start early this year.
The divergence between more resilient domestic drivers (primarily consumption) vs weakness in external trade is likely to persist. More external indicators will stay under pressure as the US-China trade conflict hurts global growth, affecting Eurozone by extension. It is most evident in the industrial sector, with overall production declining -2.4% y/y in June 2019, continuing the lacklustre trend since 1H18.Germany is under watch as recession risks rise.
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