The Moody's rating agency revised upwards its growth estimates for Italy, Germany and France. For Italy, in particular, the agency raised its GDP expectations for 2017 and 2018 to +1,3% from +0,8% and +1% respectively. According to Moody's, the euro area economy will achieve growth above potential this year and next led by the strong push from Germany. Growth of around 0,3 percentage points is expected for the eurozone in 2017 and 2018.
"The strong indicators of the countries of the euro zone - explains the vice president of the agency Madhavi Bokil - suggest that growth should accelerate in the last part of the year, while the data on consumer confidence at 16-year highs heralds a recovery driven by consumption". For Germany it raised the estimates to 2,2% for 2017 and 2% for 2018, while for France to 1,6% for both years.
For Italy, specifically, the Moody's agency expects the recovery to continue to benefit from the accommodating monetary policy and fiscal policies, as well as from the stronger growth in the rest of the European Union. The G20 economies, according to Moody's, will collectively grow at an annual rate of just over 3% in 2017 and 2018, higher than last year's 2,6%. With a sharp slowdown in some euro area economies and some emerging countries, the current growth rate of 2% in advanced economies and more than 5% in emerging markets is not only sustainable in the short term, but there is potential upside.
Moody's forecasts US growth of 2,2% in 2017 and 2,3% in 2018, down from 2,4% and 2,5%, respectively. The revisions in 2017 are the result of a weaker performance in the first half of the year and the lower growth forecast for 2018 reflects expectations of a more modest fiscal stimulus than previously assumed. Growth projections have also been revised for Saudi Arabia and South Africa in the EMEA region and India.
Monetary policy in the US is expected to continue tightening this year and beyond. Moody's also expects euro area monetary policy to become less buoyant in 2018, provided the current growth momentum remains intact. The Bank of Japan's policy stance is likely to become less accommodative when it reaches the 2% inflation target it expects in 2019.
