Today, the IMF has published new GDP forecasts for the major economies. For the Euro area, the IMF lifted its forecast to what the latest Bloomberg consensus expects (1% this year, 1.4% next year; Nordea: 1% / 1.5%). Unsurprisingly, the IMF asks for more structural reforms and urges the ECB to consider “additional measures” … such as longer-term-liquidity provision, including targeted lending.“ The IMF sees a 10 to 20 percent probability of falling prices in the Euro area.
The IMF’s forecasts for France (0.9% / 1.5%) and Italy (0.6% / 1.1%) are similar to our own. In contrast to the IMF, we expect Spain to “outgrow” Italy in both years (Nordea: 0.9% / 1.5%, vs. IMF 0.6% / 0.8%). A large difference to our own forecasts concerns Germany. While we expect growth to pick up to 2% next year (from 1.6% this year), the IMF expects a slowdown to 1.4%. There were no reasons given for that but it might be capacity constraints – worries that we think are not yet justified. Falling demand from Emerging Markets is probably is not the reason as the IMF expects GDP growth in many Emerging Markets – but not in China – to pick up in 2015. So to us, it remains a bit of a puzzle why the IMF expects slower growth in Germany than in France for 2015. But let’s see.
Bottomline: We share the IMF’s growth view on the Euro area as a whole. On a country level, we are more optimistic for Spain for both 2014 and 2015 and also for Germany in 2015.
Nordea