MNI: German Ifo Institute Sees "Robust" EZ Growth in Q1, Q2

By Christian Vits

     FRANKFURT (MNI) - Germany's Ifo Institue, the economic think tank, expects

a continued recovery in the euro area during the first half of 2018, it said

Monday.

     "Robust economic growth of 0.6% can be expected in the first and second

quarters of 2018," according to a joint projection of the Munich-based ifo, KOF

(Zurich) and ISTAT (Rome). "Growth will slow down marginally to 0.5 percent in

the third quarter," the report said.

     Key drivers of growth are investments, which will benefit from low interest

rates and rising capacity utilisation rates. Investments will increase by 1.0%,

0.9% and 0.7% respectively over the first three quarters of 2018, according to

the joint forecast. 

     Consumption by private households will also rise by 0.5 percent initially,

and by 0.4 percent in the third quarter.

     Inflation is forecast to gain momentum, with an annual increase by 1.3%

percent in the first quarter, 1.6% in the second and 1.7% in the third quarter.

     Still, Ifo highlighted a couple of risks to the outlook, namely "rising

interest rates in terms of investment and the appreciation of the euro for

exports, as well as tensions in international trade after the tariff decisions

taken by U.S. President Donald Trump. 

     Brexit, Italy's election results and tensions in the Middle East could also

have a negative impact, the institute said.

--MNI Frankfurt Bureau; +49 69 97782671; email: christian.vits@marketnews.com

[TOPICS: MAGDS$,M$E$$$,M$G$$$,M$X$$$,MC$$$$,MI$$$$,MGX$$$,M$XDS$]