Surveys take a turn for the worse

Evidence of a moderate slowdown in euro-zone economic activity has mounted in the past month, with even those survey indicators that were previously most optimistic taking a turn for the worse. After a sharp fall in April, the EC’s Economic Sentiment Indicator (ESI) now points to a slowdown in euro-zone annual GDP growth to around 1.5%. Even the German Ifo index, which had re-strengthened at the start of the year, fell in April. With both indices still at fairly high levels, we still expect only a moderate slowdown in euro-zone GDP growth to around 1.7% this year. But further falls in the surveys could change that picture.