Eurozone economy is unlikely to run out of steam, forecasts to grow 2.8 pct in 2018: DZ Bank AG

The eurozone economy is not expected to run out of steam in the near-term and is expected to grow by 2.8 percent through this year, according to a recent report from DZ Bank AG. The economy grew by 0.6 percent compared with the previous quarter in Q4 2017, according to a preliminary flash estimate.

As such, although economic growth in Q4 could not quite match the strong pace of the previous quarter when it grew by 0.7 percent, 2017 nevertheless saw a strong performance overall. Overall, GDP growth in the eurozone in the full year 2017 was 2.5 percent against the previous year.

Other leading, survey-based indicators are also at levels which suggest that the strong upturn is set to continue. 2017 should provide a very solid basis for further economic growth. However, it is likely to be difficult to step up the tempo even further, given already relatively strong economic growth last year.

"We generally expect slightly slower growth in the next few quarters, albeit still well into positive figures. We are therefore upgrading our economic forecast for the full year 2018 from 2.0 percent to 2.3 percent. The economy is still likely to grow by as much as 2.0 percent in 2019," the report commented.

At the same time, the forecast for the eurozone as a whole is largely reflected in individual country forecasts. Italy's economy grew by 1.5 percent against the previous year in 2017, its strongest performance in eight years. However, prospects for 2018 remain muted since it is likely to be difficult to form a new government after the election on 4 March. Growth this year is set to be unchanged at 1.5 percent.

The economy in the smaller countries of Finland and Austria is doing very well. Growth last year in both countries was slightly over 3 percent. Whereas Finland is able to benefit more from Russia's economic recovery, Austria's economy is being buoyed by better conditions in Central and Eastern Europe. This momentum is likely to lead to a growth of 2.7 percent respectively this year.

In 2017, Portugal's economy, which was hit especially hard by the financial crisis, at last, started to pick up momentum. In this respect, the country is benefiting from generally good economic conditions, but also from the economic prosperity of its neighbor, Spain, Portugal's most important trading partner. We are raising our growth forecast for 2018 from 2.0 to 2.4 percent.

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