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Germany’s ifo Institut expects strong economic growth in euro area

Germany’s economic research ifo Institut said that it expects the euro area’s economy to grow a quarterly 0.6 per cent and 0.5 per cent in the first and second quarter of 2018 respectively.

Economic output in the single currency bloc is forecast to expand an annual 2.5 per cent in January to March and 2.3 per cent in April to July after growing in the fourth quarter of 2017 an annual 2.5 per cent and a quarterly 0.6 per cent, the Munich-based ifo said in a joint statement with the Rome-based ISTAT and the Zurich-based KOF emailed on Wednesday. The annual inflation rate in the first quarter is expected to drop to 1.2 per cent in the first quarter and pick up at 1.4 per cent in April to June.

After the euro area’s economy expanded a quarterly 0.6 per cent in in July to September 2017, “they also expect this rate to remain unchanged in the fourth quarter of 2017,” ifo said. “The main driver of growth is private investment. Private consumption is expanding robustly, but at a slower pace than in the first half of 2017”.

The euro area’s gross domestic product is projected to have increased 2.7 per cent in 2017, it added.

“The fragile banking sectors of many countries, saddled with high levels of non-performing loans, remain a risk, but have recently showed signs of stabilising,” the institute said. “Very strong sentiment on the part of companies, consumers and the financial markets may have a positive impact”.



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