Eurozone | Higher growth and more subdued inflation in 2017-18

Our MICA-BBVA model suggests a steady growth in 3Q17 (0.6% QoQ). We revised upwards growth forecast to 2.2% in 2017 and 1.8% in 2018 driven by strong data and domestic factors, although political uncertainty is high. Headline inflation forecasts are revised slightly down to 1.5% in 2017 and 1.2% in 2018. The ECB is likely to embark in a gradual normalization in early 2018.

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