(MENAFN– ecpulse) After the European Central Bank decided last week to keep interest rate at its current low level of 0.25 percent while postponed the introduction of any new measures to combat deflation, investors will focus fourth-quarter GDP figures.
GDP data will be the most important this week as it will identify the pace of growth after the recent improvement in economic data.
Analysts predict a widening expansion to 0.3 percent in the last three months of 2013 from 0.1 percent in the previous three months. On the year, an expansion of 0.5 percent from a prior 0.4 percent drop is estimated.
In Germany, the euro area’s biggest economy, GDP preliminary reading may signal 0.3 percent expansion in the fourth quarter and 1.3 percent on the annual basis.
Data released last week showed that a composite of services and manufacturing in the 18-nation region soared to 52.9 last month from 52.1.
Economic confidence resumed its advance for a ninth months in January to 100.9 from a revised of 100.4.
The ECB expects euro area growth to reach 1.1 percent growth this year, while accelerates to 1.5 percent in 2015.
Despite the drop in unemployment to 12.0 percent in December from a record high of 12.1 percent in September, the rate is still considered high as many euro area nations struggle to leave recession.
The main threat meanwhile comes from inflation data as over the past year the rate has plunged from 2.2 percent to 0.7 percent, taking steps away from the ECB’s target of 2 percent.
Data released recently has signaled an unexpected drop in CPI for the year ended January to 0.7 percent, the lowest in four years, from a prior of 0.8 percent.
The ECB opted to hold its monetary stance this month due to the complexity of the situation, where the Governing Council will assess the latest developments next month and will take any needed action if needed.
In the U.K., the main focus will be on the awaited inflation report as it will provide the latest growth and inflation forecast by policy makers at the BOE.
The most recent data has suggested that recovery is gaining traction and the U.K. may recover faster than other developed nations.
U.K. ILO unemployment for the three months ended November dropped to its lowest in nearly five years, taking a faster step towards the 7% threshold identified by the BOE as guidance to raising interest rate.
Inflation reached BOE target for the first time since 2009 as CPI for the year ended December dropped to 2.0% from 2.1% in November.
Analyst predict a change in the bank’s guidance. One of the options could be lowering the unemployment threshold to the Fed-style of 6.5 percent to benefit from the tightening monetary policy to bolster recovery.
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