European Commission downgrades GDP outlook for 2019

Posted 07 February, 2019

The European Commission has downgraded the GDP growth outlook for the euro-area in 2019 from 1.9% expected in November to 1.3% due to slower economic strengthening in China and vague perspectives of the Brexit.

Moreover, the EC lowered the 2020 outlook to 1.6% (1.7% earlier).

According to the released data, CPI is now expected to gain 1.4% this year (1.8% earlier). Besides, the inflation target set by the European Central Bank is yet to be achieved.

Meanwhile, last year recorded smaller economic upturn in the euro-area against the previous period. The rate was estimated at 1.9% (2.4% earlier), as the EC believes.

Leaving the UK behind on its departure from the EU, the euro-area may witness slower economic growth this year at some 1.5%, while last year the rate was anticipated at 2.1%. At the same time, the year 2020 may see some recovery to 1.8%.

The worst results were recorded in Italy. The GDP growth is likely to collapse to 0.2% in 2019 with the forecast previously set at 1.2%. As a result, with this scenario, Italy may face the lowest economic upturn over the past 5 years.

At the same time, the major euro-area economy Germany may face slower GDP growth. The outlook was downgraded to 1.1%, whereas last year the rate was recorded at 1.5%.

The European Commission notes persisting uncertainties with mainly downward risks. The trade conflicts somewhat softened, though this issue keeps putting pressure on investors. Moreover, it is still possible that China's economy will rise at a slower pace than expected. As for Europea, the Brexit is the main source of the confusion in the region. 

However, some positive factors were also mentioned by the EC. In particular, the labour market rebounds along with monetary stimulation of the ECB and low inflation.

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