Euro area economic growth accelerates in Q2, economy to expand 2.1 pct in 2017 – Nordea Bank

The preliminary flash estimate released by Eurostat showed that the euro area economy grew 0.56 percent quarter-on-quarter in the second quarter, an acceleration from 0.51 percent in the first quarter. The outlook appears to be promising.

The outcome is a bit on the low side of the result implied by a PMI-based model that suggests GDP growth of 0.6 percent in the third quarter, noted Nordea Bank in a research report.

The second quarter growth marked the 17th straight quarter to record a growth. The euro area is therefore coming closer to the so far longest uninterrupted period of growth.

If the currency bloc continues to expand at the pace seen in the second quarter, the growth rate for the whole of 2017 would be 2.1 percent, stated Nordea Bank. The flow of monthly data implies that momentum is widespread and thus unlikely to falter in case of minor shocks. The strengthening of the euro is one of the factors to watch, also for the outlook of inflation.

The figures are unlikely to surprise the ECB, which expects “solid, broad-based growth in the period ahead”.

“The ECB’s October meeting looks like the most likely date for them to announce a reduction of the asset purchases as from January 2018, but we wouldn’t completely rule out September”, added Nordea Bank.