Week ahead (20th-24th January)

This week, euro area industrial production rose again by 1.8%mom, thanks to a 2.4% surge in German IP. This compensated somewhat for the disappointing German GDP figures for 2013 as a whole,  which rose only 0.4%. In contrast with previous years, the rise was mostly due to domestic demand, particularly private consumption, while the contribution from net exports was negative, which suggests that the Euro crisis had a non-negligible impact on Germany’s performance. The World Bank has revised up its forecast for global growth.

In the coming week, the IMF will revise its forecast and the first confidence surveys in the euro area in January will be published.

21 January: IMF World Economic Outlook update
After the World Bank upgraded its forecasts and given Ms Lagarde recent comments, we expect the IMF to revise global growth up. However, this should hide very different performances among regions, with Europe probably lagging behind.

23 January: Euro area PMI, January
We expect further rises in the composite PMI, which records current conditions in manufacturing, services and retail, as the economy continues to recover, albeit at a slow pace.

23 January: European Commission Flash Consumer Confidence, January
We are looking to further increases as the recovery gradually takes hold. There could be significant differences across countries, we would expect consumer confidence in France to lag or even to decline, given the President’s continued popularity slide.