- Anatoli Annenkov, senior European economist at Societe Generale SA
While ECB policy maker Ewald Nowotny argues that there is no need to step up further stimulus in the near term allowing the recently launched measures to materialize in the economy, the OECD reiterated its calls for the ECB to deploy quantitative easing. The Paris-based think-tank says the Euro zone is at risk of deflation should the economic growth stagnates or inflation expectations decline further. It projects the Euro area's inflation rate at 0.6% next year and 1.0% for 2016—the outlook which is slightly more pessimistic than the EU's own projections.
Meanwhile, German economy expanded 0.1% in the three months through September, confirming earlier estimate, as a substantial rise in private consumption offset weakness in investment. Private consumption increased 0.7% on quarter, the most in three years, contributing 0.4 percentage point to GDP. Government spending also rose, increasing 0.6% last quarter, whereas capital investment sank 0.9%. A weak Euro zone's economy as well as geopolitical tensions with Russia is affecting German companies' willingness to invest, potentially undermining growth prospects both in Germany and in the Euro bloc as a whole. Germany managed to narrowly escape a technical recession, with low unemployment, increasing wages as well as rock-bottom interest rates providing support to the Euro area's number one economy.
© Dukascopy Bank SA