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European growth flat

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European growth flat

By Vincent-Frédéric Mivelaz

European economic growth continues to show weakness: it grew 0.20% from the third to the fourth quarter of 2018 to post a yearly gain of 1.20%, a 5-year low and well below the European Central Bank forecast of 2%. There is little upside margin for EU growth. As Sino-American 2-day trade talks in Washington closed without fixes, aside from a letter of intent from China’s President Xi Jinping that confirms additional purchases of American soybeans, and the Brexit deadlock remains, the European economy will remain under pressure. France (0.30%) and Spain (0.70%) hardly grew in 2018 while the Italian economy faced a recession (-0.20%). Still, a stabilization of the EU economy is feasible if there is a positive US-China trade resolution and a soft Brexit. EUR/USD is currently valued at 1.1465, approaching 1.1440 short-term.

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