Eurozone credit impulse signals an above consensus GDP growth in 2015 – Danske

FXStreet (Barcelona) - Pernille Bomholdt Nielsen, Senior Analyst at Danske Bank, explains that the strengthening private consumption and growth in loans to the private sector supports a higher euroarea growth, further forecasting 2015 GDP to print an above consensus figure at 1.5%.

Key Quotes

“Euro area M3 money supply strengthened further in January, rising 4.1% y/y after increasing 3.6% y/y in December.”

“Growth in M1 money supply was also higher at 9.0% y/y in January, up from 7.9% in December.”

“Loans to the private sector increased 0.5% y/y in January after turning positive in December.”

“The progress in lending from banks reflects that on the supply side, the ECB has finished its stress tests and asset quality review, implying banks can focus on lending to the private sector. Added to this, the ECB’s QE programme should lead to cheaper and more accessible credit.”

“On the demand side, private consumption in particular is strengthening, and banks have also reported that demand for loans from enterprises is increasing.”

“The credit impulse, which is important for higher GDP growth, signals GDP is increasing much faster. In yearly terms it points to growth above 2%.”

“Overall, the increase in loans to the private sector supports our view of higher growth in the euro area.”

“We expect GDP growth of 1.5% in 2015, which is above consensus of 1.2%.”