Things to Look for in the Eurozone GDP Data

Stable, unspectacular growth
Economists expect quarterly GDP growth of 0.4%, unchanged from the first quarter. That would translate into annualized growth—which is how the U.S. reports its GDP figures—of around 1.5%. A weaker number would cast a cloud over the region’s recovery, as slowing growth in China and concerns over Greece’s debts weigh on investment. An outcome above 0.4% would be reason to be more cheerful, following a batch of disappointing data.

The Big Three
Economists want to see an acceleration in German activity, following a disappointing first quarter. Another question is whether France managed to build on to a surprisingly strong first quarter. Economists are looking for some payback, hence quarterly GDP growth of 0.2% or 0.3% should not cause too much of a stir. But any signs of a slump in domestic demand would raise alarm bells.
Italy, which returned to expansion earlier in the year, was probably able to hold on its first-quarter growth pace, economists think. But quarterly GDP growth of 0.3% might not be enough to reduce unemployment.

Investment Trends
Without a sustainable revival in corporate investment, the world’s second-largest economic region will remain in a rut.

Global Weakness
A revival in eurozone activity would be welcomed by economists and policymakers, particularly amid concerns over a hard landing in China and weakness in Japan. Unfortunately, Friday’s report is likely to underscore the lack of global growth drivers outside the U.S.

ECB Implications
A consensus GDP rise would likely mean the status quo for the ECB. Any signs of renewed eurozone weakness could raise expectations that the ECB’s stimulus program will have to be extended beyond next fall.