France is set to post quarter-on-quarter growth of 0.4% and year-on-year growth at 1.6% on December 23; Italy 0.3% q/q and 0.8% y/y on Thursday and the Netherlands -0.3% q/q and 1.1% y/y on Thursday. The IFO index of German business confidence also comes out on Tuesday, and is likely to deteriorate further, although the index is expected to bottom out in December.
On Wednesday, the ECB will conduct its first unlimited three-year refi operations, with the cost of funds estimated to be just under one 1%. Estimates are that banks might take up to €400 billion to $500 billion-worth of long-term liquidity.
In the UK, the Bank of England will publish its minutes on Wednesday, and is expected to maintain its dovish tone and display concerns over negative developments in Europe. Further expansion of QE by £50 billion is, however, not expected until the next meeting in February.
On Thursday, UK GDP is expected to be confirmed at 0.5% in the third quarter.
Howard Archer, at IHS Global Insight, said the figures would undoubtedly overstate the underlying performance of the UK economy, which is very weak.
“Indeed, forthcoming data and survey evidence are unlikely to ease concerns that the UK is in very real danger of suffering contraction in the early months of 2012, after the economy essentially stagnated in the fourth quarter,” he says.
In the US, final GDP figures on Thursday are expected to show annualized growth of 2% in Q3. Headline US durable goods orders on December 23 are expected to get a boost from a surge of Boeing orders last month. Aside from this, the non-defence and goods ex-aircraft figure is expected to show a modest advance.
On Wednesday, the Bank of Japan will set its target interest rate, though is unlikely to introduce change to current policy. The Bank’s monthly economic report follows on Thursday, and it is expected to downgrade its economic outlook and highlight continued concerns about the strength of the yen.
On Tuesday, the Reserve Bank of Australia releases minutes, after the Bank’s December meeting.
The statement that followed the Bank’s rate cut on December 6 was downbeat, citing growing risks to global growth and highlighting Australia’s vulnerability to a slowdown in China, as well as funding pressures for domestic banks. The minutes are expected to reinforce these themes, paving the way for further rate cuts next year.