Busy day for economic news sees key US inflation figures, IMF on the UK and eurozone growth data
After last night’s recovery on Wall Street - which was not followed up in Japan where the Nikkei 225 is in negative territory - European markets have made a bright start.
The FTSE 100 is up 46 points or 0.65%, Germany’s Dax has opened 0.9% higher, France’s Cac has climbed 0.5% and Italy’s FTSE MIB has recovered 0.7%.
More on the German GDP figures.
The country’s economy grew by 0.6% quarter on quarter in the final three months of 2017, in line with expectations. The figures were boosted by strong exports, according to the statistics agency, albeit growth was slower than the 0.7% recorded in the previous quarter. Over the entire year, the economy grew by 2.2%, the strongest performance since 2011.
The strong 4Q performance also means that without any growth in the next four quarters, annual GDP growth in 2018 would come in close to 1%.
Looking ahead, the same fundamentals which have supported growth in 2016 and 2017 should still be in place in 2018. The only question is how much additional stimulus low interest rates, the strong Labour market and the recent upswing of the entire Eurozone economy can still provide to the mature cycle of the German economy. In our view, still a lot. The German economy still has some upward potential as the output gap is positive but not extraordinary high compared with previous cycles, capacity utilisation is above its historical average but still lower than in 2007 and investments have only started to increase this year. Judging from previous cycles, the economy could continue its current pace for at least one or two more years, without showing signs of overheating.Continue reading...