Euro area’s economic growth likely remained constant in Q4, to grow slightly over 1 pct in 2020

The euro area economic growth data for the fourth quarter is set to release tomorrow. In recent months, euro area economic data have shown marked rebounds. Especially, the service sector has been quite resilient with retail sales growth firming. While the manufacturing sector continues to be relatively weak, a rebounding service sector might support a more positive growth profile for the euro area.

Moreover, inflation has accelerated recently, with core inflation accelerating to 1.3 percent year-on-year, while market-based expectations for inflation have also risen.

Consensus expectations are for the economic growth to stay constant at 0.2 percent quarter-on-quarter in the fourth quarter. Moreover, the euro area is expected to grow a little more than 1 percent in 2020, with risks around that forecast skewed toward the upside, noted Wells Fargo in a research report.

“Given an improved economic outlook and a relatively steady euro, we expect the European Central Bank will keep policy rates on hold for the time being; however, it will continue its bond-buying program to provide additional stimulus to the Eurozone economy”, added Wells Fargo.