German retail sales contracted by 3.3% in December compared to November, further eroding market hopes in the much anticipated economic rebound in 1Q of 2020. Experts surveyed by Bloomberg expected less severe contraction - by only 0.5%. November estimate was also revised lower to 1.6%, which is less than the preliminary estimate of 2.1%.

December YoY change in retail sales was modest 0.8%, while experts expected an increase of 4.5%. A month earlier, according to revised data, retail sales increased by 2.7% in annual terms, and not by 2.8%, as previously reported.

French economy also issued worrying signs about its state as the 4Q GDP fell by 0.1% compared with the previous three months, according to preliminary data from the French national statistical institute Insee. In annual terms, GDP grew by 0.8%. Analysts surveyed by Bloomberg had expected growth of 0.2% in quarterly terms and 1.2% in annual terms. In the third quarter, the growth of the French economy compared to the previous quarter was 0.3%, in annual terms - 1.4%. Exports decreased by 0.2% in October-December compared with the third quarter and by 0.4% in annual terms. Imports also decreased by 0.2% in quarterly comparison and by 1.4% compared to the fourth quarter of 2018. Contraction of both imports and exports shows the trade war impact continues to dampen rebound in the EU export industry pressing ECB to keep ultra-easy credit conditions for longer.

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