The European Commission said on Thursday (November 8) that economic growth in the 19 member states of the euro zone is expected to slow down in the next few years due to uncertainties such as rising trade tensions, Italy's budget, and overheating of the US economy.
Although the list of threats in the Commission’s report is not surprising, there are more and more signs of a continued slowdown in the Eurozone. The ECB said growth is only a steady growth at a more sustainable rate, but there is a question of whether the future will get worse.
European Commission will be the Eurozone in 2019GDPThe growth rate is lowered to 1.9%, maintaining a 2.1% estimate this year. The inflation rate in the euro zone is expected to be 1.8% in 2018, 1.8% in 2019 and 1.6% in 2020.
The euro zone's largest economy, the German economy, is expected to grow 1.7% this year after expanding 2.2% in 2017, lower than the previous estimate of 1.9%. The German economy is expected to grow by 1.8% next year, after an estimated 1.9%; the growth rate will fall to 1.7% in 2020.
European Commission Vice-Chair Valdis Dombrovskis said, “External and internal uncertainties and risks are rising and are beginning to have an impact on economic activity.”
Some recent weaknesses are related to one-off factors such as the decline in German auto production. The Bundesbank said that Europe's largest economy may be stagnant in the third quarter, but HSBCbankOn Thursday, it may have actually shrunk. Although economic growth will resume this quarter, “the basic trend is not as strong”.
The euro zone's economic slowdown, if sustained, will exacerbate concerns about the global economic downturn and complicate the ECB's choice as policymakers prepare to end asset purchases this year.
EU Economic and Financial Affairs Commissioner Moskovic said that there are many downside risks in the economic forecast. The current economic situation is good and the growth rate is expected to slow down gradually.
Moscovic believes that Italy's risk is outstanding, Italy's exit from the euro zone will not have a future, has always supported Italy to maintain flexibility, "compromise" is not a suitable wording, need to ensure that the EU's budget rules are respected.
For Italy, next year's economic growth rate is only 1.2%, lower than the 1.5% target of the populist government. This has an impact on the budget deficit. The EU expects the budget deficit to expand in the next two years and will exceed the 3% limit by 2020.
Financial website ForexliveAnalystJustin Low said that the EU expects the Italian budget deficit to exceed 3% of GDP in 2020. This estimate is a bit pessimistic and vaguely shows that there is a disagreement between the Italian government and European officials, which will bring the euro to the next few months. Some risks.
(Article source: Global Forex)