Europe's Economic Frailties on Display After Draghi's Downer
Mario Draghi, president of the European Central Bank (ECB), arrives to unveil the new 50 euro currency bank note at the ECB headquarters in Frankfurt, Germany (Photographer: Alex Kraus/Bloomberg)  

Europe's Economic Frailties on Display After Draghi's Downer

(Bloomberg) -- Europe’s economy is giving the optimists little to work with, and this week’s deluge of numbers won’t shift the needle in their favor.

A recession in Italy, a manufacturing slump in Germany and a further decline in confidence in the outlook for the euro area is what awaits in the data coming up. That will keep the mood sour after a week when European Central Bank President Mario Draghi said the risks have “moved to the downside.”

Europe's Economic Frailties on Display After Draghi's Downer

Despite his negativity, and the biggest drop in German business sentiment in almost six years, the euro rose last week. That may be because much of the bad news has been priced in, and investors have already decided that any ambitions the ECB once had about raising interest rates this year have faded.

“We’re saying we’re not going to move before through the summer,” ECB Executive Board member Benoit Coeure told Bloomberg Television on Friday. “We could change it, we could extend it.”

On Sunday, Governing Council member Klaas Knot said the loss of momentum doesn’t mean that the euro area is going to fall into a recession. “We’ll see a couple of quarters with somewhat slower growth, and that’s mostly due to external trade, but domestic demand is still holding up,” he said.

What Our Economists Say:

“Mario Draghi says the probability of recession is low. Not that low, we say. Should confidence stabilize, the euro area will ride out the shocks suffered in the second half of 2018. But slower underlying growth raises the chances of a recession and downside risks loom large.”

--Jamie Murray, Maeva Cousin, David Powell, Bloomberg Economics. Read the INSIGHT.

Draghi will speak again on Monday, at the European Parliament, before the numbers start to roll in. They include fourth-quarter GDP data for France, Italy, Spain and the euro area. U.S. GDP is also on the calendar this week.

Here’s a round up of what’s coming:


  • ECB’s Draghi speaks in European Parliament in Brussels
  • ECB’s Nowotny speaks in Vienna


France consumer confidence (January)8887


France GDP (4Q)0.2%0.3%
German GfK consumer confidence (February)10.310.4
French consumer spending (December -MoM)-0.2%-0.3%
Austria GDP (4Q)-0.3%
Italian consumer/manufacturing confidence (January)113/102.9113.1/103.6
Euro-area economic confidence (January)106.8107.3
German inflation (January)1.7%1.7%
Belgium GDP (4Q)-0.3%


Spain GDP (4Q)0.6%0.6%
German unemployment (January)5%5%
Italian unemployment (December)10.6%10.5%
Euro-area unemployment (December)7.9%7.9%
Euro-area GDP (4Q)0.2%0.2%
Italy GDP (4Q)-0.1%-0.1%
  • ECB’s Coeure speak in Cape Town
  • ECB’s Mersch speaks in Luxembourg
  • ECB’s Weidmann speaks in Mannheim, Germany


Euro-area manufacturing PMI (January - final)50.551.4
German manufacturing PMI (January - final)49.951.5
Italian manufacturing PMI (January - first reading)48.849.2
Euro-area inflation (January)1.4%1.6%

©2019 Bloomberg L.P.

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