EURO ZONE

摘要

The outlook for the Euro zone remains downbeat, with retail sales declining by a further 0.3% (m-o-m) in May and the manufacturing PMI for June implying a prolongation of the current weakness that has been evident since the end of 2018. At a speech on June 18 ECB President Mario Draghi gave his clearest indication yet that the bank would provide additional stimulus should growth falter, though our panel sees the refi rate staying at 0% for the time being (box below). A truce between the US and China in their trade dispute should provide some relief for European exporters fearful of a global slowdown, though US President Trump has since upped tariff threats against the EU over the issue of aircraft subsidies. While the dropping of Excessive Deficit procedures against Italy has avoided a potential political flashpoint, sentiment risks remain from Brexit negotiations, with the likelihood of a disorderly UK exit from the EU on October 31 having increased since Prime Minister May's resignation.