Highlights of the week

Economist insights: Mixed data in the US, slowdown in Chinese GDP growth and continuing uncertainty about Brexit

United States

• Latest economic data for the labour market and for consumption was positive...
• ... but more disappointing for the industry at the start of 2019...
• ... in line with our scenario of a slight moderation in US GDP growth to 2.7% in 2019

China

• GDP growth slowed from 6.5% to 6.4% year-on-year in the fourth quarter
• However, the acceleration in investment in infrastructure and bank credit shows that the stimulus plan is starting to produce effects
• The government announced new tax cuts, thus confirming its intention to support the country’s economy

United Kingdom

• The House of Commons rejected the deal proposed by Theresa May, meaning the conditions of the UK’s exit from the European Union remain uncertain
• We maintain our scenario according to which a no-deal Brexit would send the UK into recession

Focus eurozone: What are the factors that determine wage growth?

• Our analysis shows that wage growth is dependent not only on the labour market, but also on actual inflation in Germany...
• ... while inflation expectations are a determining factor of wage growth in the eurozone
• According to our analysis, the weak inflation expectations would lead to a slowdown in nominal wage growth in the eurozone from 2.5% in Q3 2018 to 2.0% on average in 2019