Weekly Economic Insights - 29 October 2018

Macro Highlights - 10/30/2018

Highlights of the week

Economist insights: Dynamic US GDP growth, the Italian government should revise its budget, the ECB maintains the monetary status quo

  • US GDP growth accelerated to 3.0% y-o-y in Q3, driven by an acceleration in household consumption and government spending
  • In the eurozone, the European Commission asked Italy to revise its budget; we maintain, however, our analysis according to which the risk of a resurgence of the eurozone crisis should remain limited
  • The European Central Bank reiterated the pathway of its monetary policy, while assuring that it would keep tools to ease monetary conditions if necessary

Focus US: The US budget deficit widened moderately to -3.9% of GDP in 2018

  • Despite the rise in public spending and the tax reform implemented in January 2018, the US budget deficit deteriorated from -3.7% in the fiscal year 2017 to just -3.9% in 2018…
  • ...notably thanks to the slight acceleration in inflation and  stronger GDP  growth, which was boosted by the tax cuts
  • The budget deficit could continue to rise in 2019, but the extent of its deterioration will depend notably on the outcome of the mid-term elections on 6 November

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