Eurozone week ahead: GDP, German Industrial Production and German politics – Danske Bank

In the Eurozone, next week data to be released includes the final third-quarter GDP estimate. Analysts at Danske Bank expect the tougher global trade environment to show up negatively in the export component. 

Key Quotes: 

“In the euro area, focus is set to be on the final Q3 GDP estimate, which is due out on Thursday, when for the first time we expect detailed information about the GDP components. The flash estimates showed that the euro area economy is limping along with a growth rate of 0.2% q/q. We expect collateral damage from the tougher global trade environment to show up negatively in the export component but Brexit stockpiling might again have contained the damage. Furthermore, it will be interesting to see whether domestic demand is starting to feel the pinch as well. However, rising wages might have held a helping hand under domestic demand, as negotiated wages rose 2.6% y/y in Q3 and Thursday’s print will also show how much of this translated into overall wage growth."

“On Friday, October German industrial production figures will give us a clue about how the manufacturing sector started Q4. In September, production continued to fall by 4.4% y/y but recent signs of a forming trough in leading indicators such as Ifo and PMI leave hope that the worst of the German industrial recession is behind us.”

“German politics is also entering an interesting week, with the result of the SPD party leadership run-off announced on Saturday 30 November. The outcome will have important implications for whether the SPD party will stay in the current governing coalition, or whether Germany is heading towards new elections in 2020. A win for Finance Minister Olaf Scholz’s continuity team would reduce the risk of a government collapse but we expect a final SPD decision only at the party convention in early December.”