EU Downgrades Eurozone Growth Outlook On Trade War Concerns
12 July 2018 - 7:00PM
RTTF2
Eurozone is forecast to grow slower than earlier projected this
year, as economic momentum moderated in the first half after
vigorous expansion, the European Commission said Thursday.
Moreover, the EU warned that further escalation of trade tensions
could take a toll on economic expansion.
The single currency bloc is forecast to grow 2.1 percent this
year and 2 percent next year, the European Commission said in its
latest Summer Interim Economic Forecast. The projection for this
year was downgraded from 2.3 percent.
Nonetheless, the EU said growth momentum is expected to
strengthen somewhat in the second half of 2018, as labor market
conditions improve, household debt declines, consumer confidence
remains high and monetary policy remains supportive. Citing rise in
oil prices, inflation forecast for this year was revised up to 1.7
percent from 1.5 percent estimated in Spring. Similarly, the
outlook for 2019 was lifted to 1.7 percent versus 1.6 percent in
the previous report.
"Growth in Europe is set to remain resilient, as monetary
policies stay accommodative and unemployment continues to fall,"
Pierre Moscovici, commissioner for economic and financial affairs,
taxation and customs, said.
"The slight downward revision compared to the spring reflects
the impact on confidence of trade tensions and policy uncertainty,
as well as rising energy prices."
Moscovici cautioned that further escalation of protectionist
measures is a clear downside risk.
Germany's real GDP is now expected to increase by 1.9 percent in
2018 and 2019, a downward revision compared to the Spring
forecast.
EU noted that global trade policy uncertainty could affect the
highly open German economy more strongly.
France's growth is set to gain momentum in the second half of
this year, with GDP growth expected to expand by 1.7 percent in
both 2018 and 2019.
Spain's economy is forecast to grow 2.8 percent this year on
expansionary measures of the government. The rate is then set to
slow to 2.4 percent next year.
Italy's real GDP is expected to grow by 1.3 percent in 2018
before easing down to 1.1 percent in 2019.
For the UK, a moderate GDP growth of 1.3 percent in 2018 is
forecast. Growth is projected to remain weak at 1.2 percent next
year on the Brexit uncertainty.
Sterling vs US Dollar (FX:GBPUSD)
Forex Chart
From Apr 2024 to May 2024
Sterling vs US Dollar (FX:GBPUSD)
Forex Chart
From May 2023 to May 2024