EUROZONE: Upward revision of the growth scenario

We are revising our GDP growth forecast upwards from 1.8% to 2.0% in 2017 and from 1.2% to 1.3% in 2018. Three main factors explain this revision:

• The downward revision of our oil price forecasts by $6.5/bbl on average in 2017 and $10.5/bbl in 2018 compared with those in April and, consequently, the revision of our inflation figures;
• The upward revision of our global trade expectations for our horizon (from 3.1% to 4.8% in 2017 and from 2.0% to 3.2% in 2018, respectively);
• Higher carry-over growth after the upward revision of the national account figures for Q4 16 and Q1 17 and the convergence of hard data towards survey data.

Our scenario is therefore in line with that of the consensus and the ECB staff for 2017. It remains more pessimistic in 2018 in terms of growth.

As for monetary policy, in contrast, our scenario for the ECB remains unchanged. We expect an announcement of the recalibration of the APP (Asset Purchase Programme) at the September meeting, an end to the purchases in June 2018 and a first hike in the deposit facility rate in December 2018.

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