BofAML: Nuevo trimestre, mismos temas y algunos puntos oscuros

Redacción - Viernes, 28 de Abril

• 
• 
• 
• 
• • 
  • 
  • 

Europe Economic Weekly: New quarter, same themes, some blind spots • We see a very gradual exit strategy by the ECB: EUR60bn purchases to be continued until December, followed by slow tapering. • We upgrade 2017 GDP forecasts for Spain to 2.8% yoy. However we warn that Spain is a bit of a blind spot right now. • UK consumer confidence adds little to usual determinants of consumption, which now point to slowing consumer spending growth.

After the market over-reaction during March to the suggestion of small changes to ECB language, this week the Council opted for the tiniest of moves which allowed it to acknowledge the improvement in the outlook while keeping the substance of forward guidance unchanged. We review the ECB meeting: the bottom line is that, while the ECB is increasingly relaxed on the real economy, they continue to be uncomfortable with the inflation outlook. This, we think, strengthens our view that Draghi is opting for a very gradual exit strategy, as we previously discussed at length in the ECB preview.

Beyond the ECB, we also look at some relevant topics of the week. First, we take a deep look at UK consumer confidence and we conclude that it tells us little in addition to the usual determinants of consumption (Chart 1). And those determinants point to slowing consumer spending growth. True, late 2016 may have been unusual period when 'pure sentiment' mattered. But moves in 'pure sentiment' are fleeting. In our weekly view, we look at the latest ECB's Bank Lending Survey. There is the risk that tightening credit standards may materialize as early as in Q2, an additional factor discouraging already-timid demand. In Sweden, we were right: we got QE extension from the Riksbank. This is probably the last one; we expect them to follow ECB in tapering next year.

Finally we review some developments that could become relevant soon. In the weekly view, while all eyes remain on France, we discuss the (lack of) risks around the primary elections of Italy's Democratic Party. In the main article, we upgrade GDP forecasts for Spain in 2017 (2.8% yoy from 2.5%, above consensus of 2.5%) but we warn that Spain is a bit of a blind spot right now, in our view. Political developments could complicate in the second half. The results of the centre-left PSOE primaries on 21 May are the key development to watch and, depending on the results, new elections in Spain could be a matter of time. The outcome in the event of elections could bring back concerns over the market and economic consequences of a centre-left alliance with the far left.

[Volver]