Q4 GDP grew by +0.8% q/q, twice the growth in the previous quarter and above expectations of +0.6%. Overall, GDP increased by +3.2% in 2017, the highest pace since 2007 and a top performance among the largest Eurozone countries. More than two thirds of 2017 growth was driven by net exports and fixed investment and we expect this trend to continue into 2018 in light of the ongoing positive momentum of global trade (forecast to rise by +3.9% in volume in 2018) and strong business confidence. In January, the Manufacturing PMI reached its highest level since 2000 and the capacity utilization rate stands at 83.5%, the highest since 2007. The slack absorption should improve companies’ pricing power. We expect company turnover in the manufacturing sector to continue to strengthen (+7.8% annual growth in Q3 2017) while margins have stabilized at 42% of the value added, which is above the Eurozone average. This coupled with still favorable financing conditions suggest continued investment momentum. Overall, we expect GDP growth to reach +2.8% in 2018 and +2.4% in 2019.
