La industrial production of the Eurozone should close 2015 with an increase of 1,3% and then accelerate from +0,3% in the fourth quarter of last year to +0,4% in the first and second quarters of 2016. According to Ifo, Insee and Istat in the Economic Outlook. Furthermore, according to the survey, the recovery in the Eurozone is expected to continue at a moderate pace: the GDP it rose by 1,5% in 2015 and will increase by 0,4% cyclically in the first and second quarters of 2016.
I consumption private individuals will represent the main component of growth, supported by the fall in oil prices and by the increase in labor income. Public consumption will also increase, driven, especially in Germany, by an expansionary fiscal policy.
The report then argues that the favorable conditions for access to credit, together with the increase in the degree of utilization of the plants, will constitute an incentive for the recovery of investments in the first two quarters of 2016. The downside risks mainly concern geopolitical tensions. According to the three statistical and forecasting institutes, the escalation of the Middle East conflict would lead both to an increase in the uncertainty of economic operators and to a marked recovery in the price of oil.
As for theinflation, the Economic Outlook states that last year the decline in energy goods helped to determine the stationary nature of consumer prices in the Eurozone. However, assuming that the exchange rate with the dollar remains constant at 1,08 dollars per euro and that the price of oil remains at 35 dollars per barrel, consumer prices will be influenced mainly by internal factors, gradually increasing over the horizon forecast: +0,5% in the first quarter and +0,4% in the second of 2016.
In this context, the evolution of the business world could be affected to a greater extent by the evolution of the Chinese economy, whose transformation from an economy based on exports and investments to one driven by consumption could take place less gradually than assumed, intensifying the turbulence on the financial markets. The cyclical evolution of the economies of emerging countries could turn out to be more dynamic than expected, resulting in a more pronounced recovery of exports from Eurozone countries.
