Week ahead: European Elections may benefit fringe parties

Portuguese and Euro area GDP disappointed in Q1. In Portugal, GDP was down 0.7%qoq after a downwardly revised +0.5% in Q4. Part of the decline was due to temporary factors related to international trade. Nevertheless, the Government’s growth and Public deficit objectives for 2014 are likely to be harder to reach now. In the Euro area, GDP was up 0.2%qoq, as in Q4, thanks to Germany’s 0.8% surge. France stalled and Italy sug«ffered a mild contraction.

In the Portuguese-speaking world, Angola has started the new census, the first one since 1970, that should help give more accurate information on population and living conditions. Data collection will take place until the end of the month.

In the US, Federal Reserve’s President Janet Yellen has shown concern about the recent weakness in the housing market, that could put the recovery at risk. At this stage, as other indicators remain robust, this is unlikely to lower the pace of Fed’s tapering.

Elections for the European Parliament will tak place this week, starting on the 22nd in some countries, and up to the 25th. Unlike in previous elections there is some expectation that the winning party will have an important role in choosing the President of the European Commission. Extremist parties appear set to gain seats in these elections as voters’ unhappiness about the European (and individual countries’) economic situation may lead them to punish more traditional parties.

22 May: Flash Eurozone composite PMI: The PMI is an indicator of current conditions. A value above 50 means the economy is expanding. Markets expect the PMI to remain broadly stable around 54, after several months of improvement.