The IHS Markit Eurozone Manufacturing PMI increased to 54.4 in October of 2020 from 53.7 in September, beating market forecasts of 53.1. Read more. The eurozone economy will sink deeper into recession than previously thought due to the effects of the pandemic, the European Commission (EC) has said. Euro area's gross domestic product (GDP) expectation for 2020 dropped from 1.5% to 1.4%, the European Commission said on Wednesday. Forecast is based on an assessment of the economic climate in individual countries and the world economy, using a combination of model-based analyses and expert judgement. The coronavirus outbreak has led us to reduce our growth projection for the global economy to 1.6% y/y in 2020 (see: Global Economic Outlook: COVID-19 has taken a hold of the global economy) We now expect the virus outbreak to pull the Eurozone into a recession as well The economy logged the strongest quarterly GDP expansion on record in Q3, as the easing of containment measures allowed households and businesses to resume activity. GDP forecasts for the EU, eurozone and selected countries France, the eurozone’s second-largest economy, is expected to contract by 10.6 percent this year and grow by 7.6 percent in 2021. Another disappointing blow for the Euro which sees other currencies like the GBP edge over it. The IMF warned that the euro zone's economic recovery was under threat from the ongoing second wave of coronavirus infections. A modest recovery is forecast for 2020, with growth reaching 1.8 percent, as global trade is expected to pick up and some economies recover from past stresses. The recovery in 2021 is expected to be subdued. Real GDP, % Source: Eurostat, Fitch Solutions. The impact of political factors has become very palpable. Eurozone Outlook 2020 Replay In the eurozone, Goldman Sachs Research expects a gradual pickup in growth from its current pace of 0.2% to 1.1% for 2020, driven by a friendlier global economic environment, resilient domestic demand, and progress on Brexit. The Gross Domestic Product (GDP) In the Euro Area was worth 13335.84 billion US dollars in 2019, according to official data from the World Bank and projections from Trading Economics. Euro Area - Economic Forecasts - 2020-2022 Outlook. Sie verlassen nun die ifo Website und werden auf unsere externe Recruiting Plattform weitergeleitet. Experts no longer expect that in 2022 the economy will grow to a pre-pandemic level. The eurozone's second-largest economy is expected to contract 11% this year, the economy … The German economic slowdown has dragged on the Eurozone’s economic performance of late. To adequately assess the forecasting accuracy, EZEO’s prognoses are compared with forecasts of alternative models. Economic Snapshot for the Euro Area. The forecasts by Consensus Economics are used as a comparison benchmark of EZEO’s forecasting accuracy in relative terms. h�Ԗmo�8���?�:q~�i�D�ݢ-mo�;�僗xit�p����c'�R����� '��g�L,9CI��a�R �D��g���0�0'y��b0�Hk����v` ���� �Z���`#�� �R�ӈI���pxf�#I#��k�����,��&����f��D%�涓��N�� �zmq21�ߠZZ|�YY|��}N�q�L��V�]��p�ݓ7�����M�ۺ(�'�ܖ�p�S��΋�՛�A^}��8Y�V�1"mD��?Ĕ��x�X�$#>xhV����;��#�*����ba� R��JwvV�H{*�e�xE��,/̲XlN·(�gmj�S6趮N[q��PFÊ~��,-�2������ak�m��7vfQ̂Z�j�f����i� ���r���;K�]��4ks��v�b����RD:d�C�U�Dᳵi���^@C�ƣ���x41+��M%���po���9�z �H�4�)�$�"�"�x�J*2�`Й�R�d�E�ϴNי"���2�g��4U0�����:�_�׶�����r^E�y9�r n����n7~�U��(Y(26���w��X}o����.�Ӣ�M�{�(�� �M�8;@L����T(���|\$�_$X-w��}��|�%���p�0�B9�/��wIx�f���uxI�~��c� You are now leaving the ifo website. This difference is more pronounced as far as the inflation forecasts are concerned. Trend gross domestic product (GDP), including long-term baseline projections (up to 2060), in real terms. The table lists realisations of relative RMSE and MAE. The European Commission publishes its latest forecasts for the euro area economy - 5 November 2020 - Eurozone 2020 GDP forecast -7.8% (previously -8.7%) - Eurozone 2021 GDP forecast … The COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. The coronavirus (COVID-19) pandemic has dramatically affected global economic activity since taking hold in early 2020 and the euro area economy is no exception. The IMF said certain eurozone countries were better equipped to face the challenge of the crisis than others. This analysis has been limited to quarterly forecasts of year-on-year rates to date. It said the region … The tests results firstly show that EZEO’s forecasts are significantly better statistically than those of the naive models considered (see Fig. Covid-19 related mobility restrictions remain a key risk to the economic outlook. Eurozone Economic Outlook: Eurozone GDP starts to recover (September 2020), Eurozone Economic Outlook: Historic collapse of Eurozone economy (July 2020), Eurozone Economic Outlook: Eurozone slides into Recession (April 2020), ifo Center for Macroeconomics and Surveys, Globalization and “Inter-System Competition”, ifo Center for Public Finance and Political Economy, ifo Center for Labor and Demographic Economics, ifo Center for the Economics of Education, ifo Center for Industrial Organization and New Technologies, ifo Center for Energy, Climate, and Resources, ifo Center for International Institutional Comparisons and Migration Research, Research Group Taxation and Fiscal Policy, Previous Results of the Eurozone Economic Outlook, "Evaluation des Eurozone Economic Outlook", "Wirtschaftskonjunktur 2014: Prognose und Wirklichkeit". That would be … Forecast of the gross domestic product (GDP) growth in the euro countries 2021 Monthly number of unemployed persons in the EU and Euro area June 2020 Budgetary balance in … If deviations from GDP forecasts are compared with those from inflation forecasts, it becomes clear that the former were far more pronounced in the crisis years. The main focus of collaboration between the institutes is the joint estimate of real gross domestic product (GDP), private consumption, gross fixed capital formation, industrial output and the inflation rate in the euro area for the previous quarter, as well as its forecasts for the ongoing and forthcoming quarters. In the second scenario the Consensus forecasts enjoyed an information advantage of three to four weeks, meaning that additional indicators would have been available when the Consensus forecasts were drafted (publication at point in time t + 1). Economic activity is not always easy to forecast accurately. Eurozone Economic Outlook October 27, 2020 The economy should have rebounded in Q3, following the unprecedented blow dealt by coronavirus-related lockdowns in Q2, although the pace of recovery likely slowed towards the end of the quarter. and C.W.J. These were by far the sharpest increases observed since time series started in 1995, and a rebound compared to the second quarter of 2020, when GDP had … It illustrates the distribution of errors. April 30, 2020 It is worth noting that a period of around three to four weeks lies between the drafting of the EZEO forecast and that of Consensus. The Eurozone economy shrank by 4.4 percent year-on-year in the third quarter of 2020, easing from a record slump of 14.8 percent in the previous period and compared with early estimates of a 4.3 percent contraction. To guarantee transparency, this article documents and evaluates the EZEO’s forecasts of real gross domestic product and inflation in the euro since 2004. The economic slump was not anticipated and its consequences were underestimated initially, but the forecast figures were subsequently lower than the actual development of gross domestic product in the euro area. 2020 Forecast Changes To Major Eurozone Economies. The UK GDP is projected to fall steeply by 10.3 percent in 2020, driven by a large drop in domestic demand. The sudden halt to economic activity through quarantines, event cancellations, and social distancing will result in a shock to demand. EU lowers eurozone 2020 growth forecast. Citation. The Diebold-Mariano Test is used (cf. In each case the relation between the roots from the average squared forecasting errors (relative mean absolute error) and the average absolute forecasting error (relative MAE) is monitored. He forecast eurozone GDP growth of only 0.7 per cent quarter-on-quarter in the first three months of next year. Wollmershäuser, Timo, "Evaluation der ifo Konjunkturprognosen – ein Vergleich mit den Prognosen von Consensus Economics", ifo Schnelldienst 68 (22), 2015, 26–28 | PDF, Nierhaus, Wolfgang, "Wirtschaftskonjunktur 2014: Prognose und Wirklichkeit", ifo Schnelldienst 68 (02), 2015, 43–49 | PDF, Henzel, Steffen, Wolfgang Nierhaus and Timo Wollmershäuser, "Evaluation der ifo Konjunkturprognosen", ifo Schnelldienst 67 (17), 2014, 43–45 | PDF. The European Commission publishes its latest forecasts for the euro area economy - 5 November 2020 - Eurozone 2020 GDP forecast -7.8% (previously -8.7%) - Eurozone 2021 GDP forecast … Mariano, "Comparing Predictive Accuracy", Journal of Business and Economic Statistics 13, 1995, 253–263. The eurozone economy will suffer a historic crash in 2020, but not as badly as first expected, International Monetary Fund (IMF) data showed … The Figure shows that EZEO’s forecasts beat those of Consensus: forecasts by the three institutes for GDP and inflation show smaller average deviations. Eurozone GDP expanded by 12.7% qoq after a 11.8% decline in 2Q20. Trend gross domestic product (GDP), including long-term baseline projections (up to 2060), in real terms. Author: Jonathan Lopez. Households reduced their activities in response to rising Covid-19 infection numbers and following governments’ orders or advices on staying at home and respecting social distancing rules. The speed with which the coronavirus pandemic is evolving has necessitated another round of huge cuts to our GDP forecasts. These results are strengthened by the fact that EZEO’s forecasts themselves are more accurate than Consensus forecasts, even when the latter have an information advantage. Divisions. Euro zone economic forecasts slashed on fresh lockdowns Risk of further future lockdowns could also make consumers more cautious about spending Mon, Nov 2, 2020, 07:46 ISTANBUL. The comparison with naive models shows that the latter produce far greater errors. Since the forecast results depend on the information available at the time of their drafting (cf. The estimates and forecasts are based on a large set of leading indicators and projection methods. ET By. The indicator is measured in USD at 2010 Purchasing Power Parities. Bates, J.M. The indicator is measured in USD at 2010 Purchasing Power Parities. November 25, 2020. However, to exclude the possibility that any of our results are only driven by this information advantage, we now also analyse the forecasts of annual rates of change in GDP growth and inflation. 1891 0 obj <>stream Prior to and just after the start of the crisis, forecasts of real gross domestic product are relatively good. Fresh lockdowns announced across Europe in recent days to contain the resurgence of the coronavirus pandemic have triggered a flurry of downgrades to economic growth forecasts as restrictions on activity threaten the continent’s recovery. Calendar Forecast Indicators News. In line with these evaluations, this article assesses the quality of the Eurozone Economic Outlook (EZEO)’s forecasts of real gross domestic inflation in the euro area. Eurozone: Coronavirus crisis strikes unprecedented blow to Eurozone economy in Q1. The economy logged the strongest quarterly GDP expansion on record in Q3. Forecasting errors increase with longer forecasting windows in this case too. Following the release of Q2 GDP data which, at -12.1% q/q, -15% y/y, were the worst on record, but better than we had anticipated, we have raised our 2020 Eurozone GDP growth forecast to -7.7% from -8.2%; our 2021 forecast changes marginally to 6.1% from 6.2% (consensus: -8.1%; 5.9%). As initially explained, Consensus forecasts are used, which are published at the same time as the respective EZEO forecasts (publication at point in time t). The IMF said certain eurozone countries were better equipped to face the challenge of the crisis than others. experienced negative growth rates in Germany, the Netherlands, and Turkey during 2019. The figure shows forecasting errors over various forecasting horizons. Although EZEO forecasts of GDP growth are more accurate on average (statistically significant), the difference is small. The greatest negative contribution came from private consumption. The economy logged the strongest quarterly GDP expansion on record in Q3. Forecasting errors show that there is no statistically significant difference between the forecasts by EZEO and those made by Consensus Economics. Divisions. Eurozone countries felt a more devastating slump, led by Italy where economic sentiment shrunk 17.6 points to 83.7. The economy logged the strongest quarterly GDP expansion on record in Q3, as the easing of containment measures allowed households and businesses to resume activity. As a result of the pandemic, the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis. This lies on the side of the three institutes involved in the EZEO. However, these tests do not prove any statistically significant difference in the forecasting power of GDP growth between EZEO and Consensus Economics. Read more. Granger, "The Combination of Forecasts", Operations Research Quarterly 20, 1969, 451–468. Pw | European Economic Outlook 2020 6 Manufacturing has contracted, i.e. International merchandise trade decreased in volume by historic 12.5%, despite a rebound in June (+7.6%). Spain's economy is forecast to rebound strongly in the second half of the year, but the recovery will be uneven across sectors. A forecast is therefore all the better, the nearer the corresponding point lies to the diagonal. Eurozone Q3 GDP up nearly 13%, still far from pre-pandemic levels. In cooperation with INSEE (Paris) and Istat (Rome), the Ifo Institute has published the Eurozone Economic Outlook since 2004. The EU economy is forecast to contract by 7½% in 2020 and grow by around 6% in 2021. The reading pointed to the biggest increase in factory activity since August of 2018 as output and new orders growth quickened and backlogs of work were the highest since February of 2018. 2020/10/30 June 24, 2020 Description: Global growth is projected at –4.9 percent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast. As Bates and Granger (1969) show, the average value of the expectations of a large number of experts has a very high expected forecasting performance, provided that the individual forecasting errors are independent of each other. In all cases, the forecast quarterly year-on-year rates of change are compared with the first results officially released by Eurostat. As Evgeny Redzyuk, an expert of the Institute of Economics and Forecasting of the National Academy of Sciences of Ukraine, writes in his text for ZN.UA, in comparison with the economic forecast for summer 2020, the expectations for recovery of […] The Eurozone economy contracted sharply in the first quarter of this year, after marginally expanding in Q4 2019. April 30, 2020. Italy’s economy was on course to slump by 9.1 per cent in 2020, followed by an expansion of just below 5 per cent the following year. Henzel et al. endstream endobj 1892 0 obj <>stream Real GDP is projected to fall by 8.0% in 2020 and to rebound by 5.0% in 2021 and by 3.2% in 2022. 2014; Nierhaus 2015). This projection, broadly unchanged from the April 2019 World Economic Outlook, masks significant differences between advanced and emerging Europe. h�\�_O�0ſ�}c��uD !!l�F���ҭwڰ�.���ooH��۽紿s:#0����}y�Ԣ4�����j2��d��%H�`��4��5̫Jj�p�u{X���z�Z��6���e�a�ݥ"b"�D\���B�! April 30, 2020. For evaluation purposes, EZEO’s forecasts are compared with those of Consensus Economics and two naive statistical models. Related Fitch Ratings Content: 20/20 Vision - October 2020 Fitch Ratings-London-30 October 2020: The recovery in US and eurozone GDP in 3Q20 after lockdowns were eased was very strong and much sharper than expected in the September 2020 Global Economic Outlook (GEO) forecasts, particularly for the eurozone, says Fitch Ratings in its latest '20/20 Vision' chart pack. April 30, 2020 Diebold and Mariano 1995) to test the difference in the forecasting errors generated by various models. Eurozone Economic Outlook: Eurozone GDP starts to recover (September 2020) In the second quarter, global economic activity declined sharply due to COVID-19 pandemic containment measures. For example, Germany’s car exports to the United Kingdom have fallen by 23 percent since the referendum in 2016, mainly caused by Brexit-related uncertainties and the appreciation of the euro versus the pound.1 The sectoral trend of value-added growth highlights the rela… For the Netherlands and Wollmershäuser 2015), the article ends with a comparison of forecast average annual rates of change by EZEO and Consensus Economics, and the latter is granted an information advantage. April 30, 2020 Eurozone: ECB cuts rates on long-term liquidity operations and introduces new anti-pandemic auctions. On the other hand, The forecasts for inflation are significantly better statistically. By Eurostat qoq after a 11.8 % decline in 2Q20 respiratory disease COVID-19 have a drastic on. 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