Euro area economic growth likely to reach 2.4 pct in 2018

Given the robust leading indicators, the momentum of euro area economic growth is expected to remain strong in the first quarter of next year. According to an Erste Research Group, the euro area economy is expected to expand 2.6 percent in the first quarter of 2018.

The currency bloc continues to advance from strength in foreign trade – export growth accelerated to 5.2 percent year-on-year in the third quarter. On the country level, Italy and France were the main contributors to the growth acceleration.

The global economic environment continues to be solid. Growth in emerging markets continues to advance from capital inflows and stable commodity prices. Furthermore, the structural reforms implemented in France should give an initial boosts to economic growth next year. Moreover, historical highs in manufacturing capacity utilization along with rapidly growing order books should boost investment activity in the year ahead.

“All in all we therefore expect strong momentum in euro zone GDP growth to be maintained and reach +2.4 percent in 2018”, stated Erste Group.

The headline inflation is expected to accelerate slightly to an average rate of 1.6 percent in 2018. This should mainly be driven by a gradual rise in core inflation. It continues to be uncertain  to what degree expected economic strength will manage to invigorate core inflation next year, added Erste Group.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Euro was highly bullish at 130.381, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 8.83105. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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