Eurozone: The following represents a general Table of Contents outline for the Country Economic Forecast. The actual report may cover any or all of the topics listed below. Highlights and Key Issues - four/five paragraphs of analysis covering the main economic and political issues contained in the subsequent Economic Overview Forecast Table showing % changes for the country - with 2 years of historical data and 4 years of forecast data for the following: Domestic demand Private consumption Fixed investment Stockbuilding (% of GDP) Government consumption Exports of goods and services Imports of goods and services Unemployment Consumer prices Current account balance (US$ and % of GDP) Government budget (% of GDP) Short-term interest rates (%) Long-term interest rates (%) Exchange rate (vs. US dollar) Exchange rate (vs. euro) Economic Overview - two pages of events-driven analysis highlighting the most recent economic activity and, where relevant, political developments of the country, detailing significant changes to Oxford Economics' forecasts Charts and Tables - covering a full range of economic developments relevant to the time period covered. These could include such topics as: Contributions to GDP growth Monthly industrial output Business and consumer confidence Unemployment rate Retail sales Prices and earnings Consumption and investment Government balance and debt GDP and industrial production Monetary policy and bond yields Background Information on the country One or two pages of text covering the main historical political and economic factors that determine the country's current position Key Facts on the country Map of the country Key political facts Long-term economic and social development - changes since 1980 Structure of GDP by output - latest year Long-term sovereign credit ratings and outlook Corruption perceptions index- latest year Structural economic indicators - changes since 1990 Destination of goods' exports -prior years - latest year Composition of goods & services exports - latest year
There are encouraging signs that the Eurozone economy is starting to stabilise. Industrial production rebounded in April after a poor Q1 and the May manufacturing PMI was up to its highest level for 15 months. The improvements in manufacturing conditions were particularly significant in the peripherals, although they remained in contractionary territory. This supports our view that Eurozone GDP will stop falling and start to grow in 2013H2, albeit very slowly. We forecast a fall of 0.6% in GDP this year. The European Commission’s (EC) country-specific assessment of fiscal policy and structural reforms provides further support for our forecast. These reports, published at the end of May, are in line with our view that fiscal policy will be allowed to be relaxed from 2014. A number of countries have been given more time to reduce their deficits to 3% of GDP and instead the EC has emphasised the need to make progress with structural reforms. We had anticipated this move and had already assumed less stringent austerity in the forecast. One disappointment relates to the ECB’s likely monetary policy measures. At its early June press conference, the ECB downplayed any plans to foster lending to small and medium-sized enterprises (SMEs). Instead, the ECB seemed to focus on cleaning up banks’ balance sheets. Whilst necessary in the medium term, this effort to restructure the banking sector could be damaging to growth in the short term.