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The Weekly Brief

Contributor Global Markets Insights Strategy Team

The data in Europe continues to be weak. Eurozone GDP for the fourth quarter grew by just 0.2% over the previous quarter.

The weakness is broad based across the region. Italian growth contracted for the second consecutive quarter and Germany saw no growth in the fourth quarter. The uncertainty around the global economic outlook is causing the domestic economy in Europe to slow. It’s not all bad news though. The fall in the oil price should help European businesses by easing cost pressures. Historically, there has been a close inverse relationship between the oil price and consumption in the region, suggesting that the recent move in oil could help to boost consumption. It is also worth remembering that 25% of eurozone exports go to the emerging world, so stimulus in China could provide a welcome boost for the European economy.

The lower oil price should help consumption in Europe

% change quarter on quarter (LHS), oil price in euros (RHS inverted)

Source: Bloomberg, Eurostat, Thomson Reuters Datastream, J.P. Morgan Asset Management. Data as of 31 January 2019.

The Weekly Brief (18 February 2019)

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