Fears of a Prolonged Period of Stagnation

Consensus Forecasts

In the wake of Italian GDP plunging by 0.9% (q-o-q) in Q4 2012, last month’s parliamentary elections ended in stalemate. Opposing parties must now seek to form a coalition government – or call new elections. Meanwhile, the United Kingdom had its coveted triple-A credit rating downgraded to Aa1 by Moody’s. Speculation is mounting that the central bank’s 2% inflation target could be raised in this month’s budget as George Osborne looks to give the Bank of England greater room to spur activity.

US consumption slowed at the start of 2013 as households felt the impact of federal tax increases introduced on January 1. Elsewhere, French GDP fell by 0.3% (q-o-q) in Q4 2012 and rising joblessness could hamper domestic demand in Q1, fuelling fears of a second recession in less than a year.

Our regular survey of Quarterly Forecasts shows our panels’ forecasts for GDP growth, Consumption, Industrial Production, Inflation and 3-month Interest Rates through to Q4 2014. Moreover, our Significant Changes section contrasts the latest quarterly GDP growth expectations with those from March and September 2012.

You can download a sample of Consensus Forecasts G-7 and Western Europe at www.consensuseconomics.com.

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