European Commission Forecasts Slowdown of Eurozone Economic Growth in 2019

Forex News

The European Commission published its economic forecast for the euro area. According to the forecast, the European Commission expects that economic growth in the 19 countries sharing the euro will slow to 2.0% next year, from 2.3% this year after it reaches 2.4% in 2017. In its forecast, the European Commission stressed the need for rapid implementation of reforms in the Eurozone.

Among the risks to economic growth, the Commission highlighted the volatility of the financial market, the pro-cyclical fiscal stimulus in the United States, which could lead to overheating and accelerating the growth of interest rates in the US and the escalation of trade protectionism.

In its report, the European Commission also predicts that inflation in the euro area will accelerate to 1.6% in 2019 from 1.5% this year. At the same time, the total state deficit in the Eurozone is expected to decline to 0.6% of GDP in 2019 from 0.7% this year, and the debt next year will drop to 84.1% of GDP from 86.5% this year.

Meanwhile, today’s data showed, that the Eurozone inflation slowed in April. The Eurostat said its consumer price index fell to 1.2% in April from the same month a year earlier, compared to expectations for a reading of 1.3%. Core, or underlying inflation, which strips out volatile items such as energy and food, declined to an annual rate of 0.7% from 1.0% in the previous month. The ECB targets inflation of close to but just under 2%.