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Eurozone Ends 2020 With a 5% GDP Contraction
The Eurozone GDP report came out a while ago, showing another contraction in Q4, which will probably turn into a recession, since Q1 of 2021 is expected to be negative as well. The ZEW economic sentiment turned higher but it is not matching the economy right now, so we will see how these two indicators diverge further in the coming months.
Eurozone Q4 GDP Second Estimate
- Q4 GDP second estimate -0.6% vs -0.7% prelim
- 2021 GDP YoY -5.0% vs -5.1% prelim
The reading shows that the economic contraction was less than initially estimated. That is some good news, but this just reaffirms that the Euro area economy still remains on track for a possible double-dip recession.
Germany February ZEW Survey
- February ZEW survey current situation -67.2 vs -66.5 expected
- January ZEW survey current situation was -66.4
- Expectations 71.2 vs 59.5 expected
- January expectations were 61.8
- Eurozone expectations 69.6
- Prior Eurozone expectations were 58.3
Investor sentiment shows that current conditions remain rather tepid for the most part, but there is plenty of optimism surrounding the outlook as the vaccine rollout starts to take shape across the Eurozone.
The jump in the expectations is the highest since September last year and reaffirms that the market remains more forward-looking when viewing the German and Euro area economies at this point in time.
That said, this puts pressure on things progressing smoothly in the coming weeks/months, in order to keep the optimism flowing; otherwise, dialing back on that could weigh on the Euro sentiment moving forward.
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