BNY highlights a fragmented Eurozone recovery where German growth is undermined by French and Italian manufacturing declines and impending fiscal tightening, potentially forcing a shift in ECB policy expectations.
Eurozone growth is not broad-based: Germany anchors the recovery, but French and Italian manufacturing are slipping, and political uncertainty is weighing on French PMIs. That weakens the euro's growth backdrop, while looming French fiscal consolidation could reshape ECB expectations. Germany's strength is the main offset.
French and Italian manufacturing are slipping, and political uncertainty is weighing on French PMIs, while growth is not broad-based.
Looming French fiscal consolidation could reshape ECB expectations.
BNY analyst Geoff Yu warns that Eurozone economic expansion remains uneven, with German recovery failing to offset manufacturing weakness in France and Italy. Looming fiscal consolidation in France now threatens to complicate the European Central Bank's policy trajectory as political uncertainty weighs on regional PMIs.
French and Italian manufacturing are slipping, and political uncertainty is weighing on French PMIs, while growth is not broad-based.
Looming French fiscal consolidation could reshape ECB expectations.