Winter 2019 Economic Forecast: growth moderates amid global uncertainties

Moscovici 2019 EU

Pierre Moscovici, Member of the EC in charge of Economic and Financial Affairs, Taxation and Customs, will give a press conference on the publication of the Winter 2019 Economic Forecast. © European Union , 2019 / Source: EC – Audiovisual Service / Photo: Mauro Bottaro.

This article is brought to you in association with the European Commission.


The European economy is expected to grow for the seventh year in a row in 2019, with expansion forecast in every Member State. The pace of growth overall is projected to moderate compared to the high rates of recent years and the outlook is subject to large uncertainty.

Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said: “All EU countries are expected to continue to grow in 2019, which means more jobs and prosperity. Yet our forecast is revised downwards, in particular for the largest euro area economies. This reflects external factors, such as trade tensions and the slowdown in emerging markets, notably in China. Concerns about the sovereign-bank loop and debt sustainability are resurfacing in some euro area countries. The possibility of a disruptive Brexit creates additional uncertainty. Being aware of these mounting risks is half of the job. The other half is choosing the right mix of policies, such as facilitating investment, redoubling efforts to carry out structural reforms and pursuing prudent fiscal policies.”

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “After its 2017 peak, the EU economy’s deceleration is set to continue in 2019, to growth of 1.5%. This slowdown is set to be more pronounced than expected last autumn, especially in the euro area, due to global trade uncertainties and domestic factors in our largest economies. Europe’s economic fundamentals remain solid and we continue to see good news particularly on the jobs front. Growth should rebound gradually in the second half of this year and in 2020.

Economic growth

Economic activity moderated in the second half of last year as global trade growth slowed, uncertainty sapped confidence and output in some Member States was adversely affected by temporary domestic factors, such as disruptions in car production, social tensions and fiscal policy uncertainty. As a result, gross domestic product (GDP) growth in both the euro area and the EU likely slipped to 1.9% in 2018, down from 2.4% in 2017 (Autumn Forecast: 2.1% for EU28 and euro area).

Economic momentum at the start of this year was subdued, but the fundamentals remain sound. Economic growth will continue, albeit more moderately. The European economy is set to continue to benefit from improving labour market conditions, favourable financing conditions and a slightly expansionary fiscal stance. Euro area GDP is now forecast to grow by 1.3% in 2019 and 1.6% in 2020 (Autumn Forecast: 1.9% in 2019; 1.7% in 2020). The EU GDP growth forecast has also been revised down to 1.5% in 2019 and 1.7% in 2020 (Autumn Forecast: 1.9% in 2019; 1.8% in 2020).

Among the larger Member States, downward revisions for growth in 2019 were sizeable for Germany, Italy, and the Netherlands. Many Member States continue to benefit from robust domestic demand, also supported by EU funds.

Inflation

Consumer price inflation in the euro area fell towards the end of 2018 due to a sharp drop in energy prices and lower food price inflation. Core inflation, which excludes energy and unprocessed food prices, was muted throughout the year, despite faster wage growth. Overall inflation (HICP) averaged 1.7% in 2018, up from 1.5% in 2017. With oil price assumptions for this year and next year now lower than in autumn, euro area inflation is forecast to moderate to 1.4% in 2019 before picking up mildly to 1.5% in 2020. For the EU, inflation is forecast to average 1.6% this year and then pick up to 1.8% in 2020.

Uncertainties

A high level of uncertainty surrounds the economic outlook and the projections are subject to downside risks. Trade tensions, which have been weighing on sentiment for some time, have alleviated somewhat but remain a concern. China’s economy may be slowing more sharply than anticipated and global financial markets and many emerging markets are vulnerable to abrupt changes in risk sentiment and growth expectations. For the EU, the “Brexit” process remains a source of uncertainty.

For the UK, a purely technical assumption for 2019

In the light of the process of withdrawal of the UK from the EU, projections for 2019 and 2020 are based on a purely technical assumption of status quo in terms of trading patterns between the EU27 and the UK. This is for forecasting purposes only and has no bearing on the process underway in the context of Article 50.

Background

This forecast is based on a set of technical assumptions concerning exchange rates, interest rates and commodity prices with a cut-off date of 25 January 2019. For all other incoming data, this forecast takes into consideration information up until 31 January.

The European Commission publishes two comprehensive forecasts (spring and autumn) and two interim forecasts (winter and summer) each year. The interim forecasts cover annual and quarterly GDP and inflation for the current and following year for all Member States and the euro area, as well as EU aggregates.

The European Commission’s next comprehensive forecast will be the Spring 2019 Economic Forecast in May 2019.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

UN agencies call for more resettlement and end to detention of asylum seekers in Libya

6th Edition of India m2m + iot Forum to open its door on 14th January, in association with The European Sting

Top UN political official updates Security Council on Iran nuclear deal

Mozambique cyclones a ‘wake-up call’ to boost resistance: UN weather agency

MEPs and European Youth Forum call on EU to Invest in Youth

Ebola Outbreak in Democratic Republic Congo is ‘largely contained’: WHO

Security Council urges countries to factor child protection into conflict prevention efforts

“Asia-Pacific takes stock of ambitious development targets”, written by the Heads of UNFPA and ESCAP

‘We are nowhere closer’ to Israeli-Palestinian peace deal, than a year ago, Security Council hears

How populist and xenophobic movements in the EU tear apart European businesses and startups

Eurozone stuck in a high risk deflation area; Draghi expects further price plunge

A third of world’s out-of-school youth live in conflict, disaster-affected countries: UNICEF report

CHALLENGING THE ZEITGEIST OF DIGITAL – Change making projects innovate mobile support for refugees, inclusive environments, early breast cancer detection and more

From glass ceiling to glass cliff: women are not a leadership quick-fix

Wednesday’s Daily Brief: mental health, conflict prevention, Ebola in Uganda, Sudan protests, child labour

Hundreds of wounded Gaza protesters risk limb amputation without immediate help, warns top UN official

New York high school students are getting free water bottles to cut plastic waste

Gender disparity in salary and promotion in medicine: still a long way to go

New Report Offers Global Outlook on Efforts to Beat Plastic Pollution

Winter 2019 Economic Forecast: growth moderates amid global uncertainties

MEPs urge the EU to lead the way to net-zero emissions by 2050

This new way of understanding disease is changing medicine

JADE Handover Ceremony at the European Parliement

Service Engineer Intern – 1991

Berlin wants to break South’s politico-economic standing

Sudan: UN chief deplores excessive force used against pro-democracy protesters, calls on military and civilian leaders to ‘stay the course’ in negotiations

Press conference by EC Vice-Presidents Valdis Dombrovskis (left) and Jyrki Katainen, on the Commission's proposals in the framework of the financial union (Source: EC Audiovisual Services / Copyright: EU, 2018 / Photo by Georges Boulougouris)

EU Finance ministers agree on new banking capital rules and move closer to Banking Union

‘The clock is ticking’ on meeting the Sustainable Development Goals, says UN deputy chief

UN chief urges Somalis not to be ‘deterred’ by latest deadly terror attack

Better ID card security to curb document fraud

Four lessons from Africa on building effective business ecosystems

The importance of exchanges for the medical students of the world

Q and A on the draft digital copyright directive

The European Parliament wants to stay in one place

The Brussels bureaucracy blocks the Youth Guarantee scheme

An expert in the South China Sea issue on an exclusive interview at the European Sting

How smartphones can close the global skills gap for billions

Here are 4 ways investors can influence more secure and responsible innovation

Our children’s career aspirations have nothing in common with the jobs of the future

Populist Eurosceptics helped by Trumpists seriously threaten the EU edifice

EP President praises Nobel Peace Prize award to Denis Mukwege and Nadia Murad

These are the world’s 20 most dynamic cities

Reflections on the the biggest refugee crisis since World War II

Companies have a new skill to master – innovation

Terrorist content online should be removed within one hour, says EP

More needs to be done to bridge the digital gender divide

Trump rejects Europe’s offer for zero car tariffs; he had personally tabled that idea in July

Khashoggi murder trials must public and meet international standards, UN expert urges

Medschool 4.0: how to succeed in the smart revolution of healthcare

EU sets ambitious targets for the Warsaw climate conference

Antibiotics are contaminating the world’s rivers

FROM THE FIELD: Liberia boosts efforts to guard against rising seas

Amsterdam is getting a 3D-printed bridge

EU Parliament: ECB accountable for not supporting real economy

FROM THE FIELD: Stopping aquatic hitchhikers to safeguard environments at sea

A skills gap is jeopardizing efforts to end energy poverty

Migration crisis, a human crisis after all

Parallel downfalls of Merkel and Deutsche Bank threaten Germany and Europe

5G mobile is nearly here – but we should share networks to make it affordable

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s