European automotive sector is facing deep crisis
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Source: European Commission
Germany and France GDP fell 0.2% and 0.1% in Q4 2024. Italy's GDP was flat for the 2nd consecutive quarter. In effect, Euro-area economy did not grow in Q4 2024. Germany has contracted for 2 consecutive years in 2023 and 2024... Source: Bloomberg, Global Markets
Indeed, with Germany and France shrinking, the pressure was on. The eurozone economy is barely moving with Q4 GDP flat for the eurozone, with Germany (-0.2%) and France (-0.1%) dragging things down while Portugal (+1.5%) and Spain (+0.8%) showed some life. The ECB is playing it cautious, adjusting rates based on data. They reiterated that the disinflation process is well under way and that they see inflation converging towards 2%. The ECB says it’s not locking into a rate path—just watching inflation and economic data closely. The bond market is taking it quite positively with 10y Bond yield down 7bps at the time of our writing. With growth slowing, more cuts might be on the table. Let see what Mrs. Lagarde have to say during the conference call - especially with regards to wages and tariffs. Baring a major positive surprise coming from Germany on the fiscal side, the Eurozone growth outlook remains bleak - this opens the door to at least 1 rate cut every quarter.