Intesa Sanpaolo: The round of March confidence surveys in the Eurozone displayed the initial effects of the international geopolitical crisis, especially on consumers and industrial firms; the impact on the European cycle may last well beyond a few weeks.
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Weekly Economic Monitor – 1 April 2022
Intesa Sanpaolo – Research Department
In the meantime, inflation hit a new high in March since the records began, at 7.5%. On this front, national Governments have intervened with further measures aimed at mitigating the effects on households and businesses, after those already put in place over the past few months: the measures introduced since last Autumn are worth almost one per cent of GDP, but they will contain only partially final energy prices.
The week’s market movers
Rather quiet week ahead in the euro area in terms of data releases. Industrial output figures in Germany and France (and German manufacturing orders) should be consistent with a slowing activity in February, although the more serious effects of the war in Ukraine on manufacturing in the Eurozone will start to be captured starting from March data. Retail sales in the Eurozone are expected to have recovered slightly in February compared to the opening month of the year. The second readings of March services and composite PMIs could undergo a downward revision if compared to the preliminary estimates. Lastly, the Italian Government is expected to present its Economic and Financial Document this week.
In the United States , only a few noteworthy data releases are lined up in the next week. The March services ISM is forecast higher, thanks to the recovery of activity in the services sector, and the trade balance deficit is estimated to have dropped slightly in February. Focus will be on the minutes of the March FOMC meeting, that should provide new information on the plan and timeline for the reduction of the balance sheet. As regards rates, the discussion on risks and on the potential bringing forward of the Fed’s moves will be important in drawing up policy path forecasts, for 2022 especially.
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