Europe Economic Weekly Russian risks rising ahead of ECB & BoE meetings

BofA Merrill Lynch Global Research - Viernes, 01 de Agosto

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The weekly view: ECB preview: Clouds on the horizon?  We expect no action from the ECB next week. With data in line with expectations, the central bank is likely to highlight that this is a transition period, and will likely focus its discussion on the range of risks surrounding the economic outlook. 

Euro area: Russia: it's what we don't know that matters

We anticipate no additional impact on Euro Area GDP from the new sanctions on Russia beyond what is already included in our forecasts. But further escalation/ retaliation could have a strong impact on already-weak Euro Area growth. 

UK: Spare capacity moving into rate hike range 

The BoE may narrow their estimate of slack in the economy in their August Inflation Report - another step towards raising rates. 

Peripheral watch: Greece: Time for a pause? 

After a year in which Greece has surprised on the upside both in terms of economic performance and institutional developments, we feel there is little room for additional incremental surprises going forward, particularly in Q4. 

The week ahead: 

Next week, we expect the Spanish composite PMI to recover somewhat, with Italy broadly flat. Italian GDP in Q2 could rise to +0.2% QoQ after the -0.5% in Q1, but we see the risks as skewed to the downside.  

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