Euro area quarterly GDP growth likely to moderate to 0.3% Q/Q in Q2

The Euro Area GDP growth for the first quarter came in at 0.5%, marginally short of economists’ consensus estimates of 0.6% q/q. Annual growth was 1.5%, slightly below expectations of 1.5%.

Earlier this month, European Commission slashed its inflation forecast for the euro area and warned of slower-than-predicted growth across the 19-nation bloc. The Commission called for euro area’s largest economies to reduce debt and modernize labor markets. According to the EU Commission, the gross domestic product of the 19-country currency area is expected to expand 1.6% this year, less than 1.7% growth of 2015 and 0.1% points below its February forecast.

"We expect euro area quarterly GDP growth to moderate to 0.3%Q/Q in Q2. A weaker GDP figure would tally with the softening in economic sentiment seen since the end of last year reflected in the PMIs and Commission confidence survey, and would also be consistent with the profile of recent economic activity, whereby a very strong January was followed by a softer couple of months." said Daiwa Capital Markets Research.