Report
If core inflation were to fall sharply in the euro zone, corporate profitability would drop
The lack of productivity gains in the euro zone is leading to persistent labour market tightness. If core inflation were to fall sharply, which is the scenario of many economists, it would become markedly lower than growth in wages and unit labour costs, and corporate profitability would decline significantly. As a result, until productivity recovers, the euro zone will have to choose between a situation in which consumption is weak, corporate investment continues to grow and core inflation remains high, and a situation in which consumption is rising, earnings and corporate investment are falling and inflation becomes low.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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