In the euro area, the deceleration of GDP in the fourth quarter (0.3% after 0.4% in the third) was determined by a delay in construction investments due to adverse climatic conditions in France and Germany and by a slowing world demand. Private consumption rebounded in Q4 (0.4%), partly attributable to purchases of cars in France related to the end of incentives to scrapping on 31 December 2010.
GDP in Q1 is expected to accelerate, followed by a fading (0.5%, 0.4% and 0.4% respectively in Q1, Q2 and Q3). Private consumption should be stable (around 0.2%) suffering from conditions of the labor market that, albeit with high diversity at the national level, on the whole area would remain fragile. In addition, both fiscal consolidation in many euro countries, and the upward trend in inflation will weigh negatively on the real incomes of households.
On the assumption that oil prices will stabilize at $ 113 a barrel and that the rate of dollar / euro rate fluctuates around 1.38, according to the forecast, inflation should stabilize at 2.6% in June and September, after 2.2% in December 2010. It is expected that the investments show a rebound in Q1, due to a resumption of construction and to the improved growth prospects.
In Q2 and Q3, investments would continue to grow at a more moderate rate, due to the deceleration of world trade and financial market uncertainty. The latter, in early 2011, suffered from the tensions due to the sovereign debt of some countries, notably Portugal, Spain and Ireland.
In addition, the turmoil in the nations of the Middle East and North Africa (MENA) have reinforced fears about the continued upward trend in oil prices and the stiffening of monetary policy to contain inflation. Finally, the earthquake in Japan has worsened the prospects for certain strategic sectors such as nuclear power, electronics, banking, insurance and automotive.