Eurozone latest publications
The ECB action was broadly in line with what we were expecting (somewhat to the lower bound) announcing a package of further accommodative measures. Moreover, the central bank reaffirmed its readiness to adjust its instruments further if needed (as risks remain tilted to the downside).
Eurozone growth forecasts are revised slightly upwards due to better incoming data, but we continue to expect some slowdown from 1.2% in 2019 to 0.9% in 2020 before recovering gradually to 1.2% in 2021.
Eurozone growth stabilized in 3Q19 thanks to the resilience of domestic demand, while the deterioration of industrial production and exports has halted. Our MICA-BBVA model projects still low growth in 4Q19. Core inflation has stepped in November, but it is early to tell if it will be sustainable.
More evident negative effects of worsening global demand and uncertainty on exports and investment explain the downward revision of growth in 2020. Further monetary easing and slightly expansive fiscal policy could help to halt deteriorating confidence and to underpin spending, with increasing divergence across countries.
Last week the European Commission presented a proposal for developing a new class of low-risk assets denominated in euros. SBBS, or sovereign bond-backed securities, are securitisations backed by a set of sovereign bonds of euro zone countries. Each SBBS would thus incorporate an exposure to a small part of sovereign bonds …
This paper shows stylized facts, based on aggregate and sector specific data, on the rather large retrenchment of cross-border lending by Euro-area banks into emerging markets.