Brussels, Feb 8 : The European Commission (EC) has published its Winter 2019 Economic Forecast which covers the years 2018, 2019 and 2020 and includes data on gross domestic product (GDP) growth and inflation for all 28 EU Member States.
According to the Commission's forecasts, published on Thursday, 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 1.9pc in 2018, down from 2.4pc in 2017 (Autumn Forecast: 2.1pc 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 1.3pc in 2019 and 1.6pc in 2020 (Autumn Forecast: 1.9pc in 2019; 1.7pc in 2020). The EU GDP growth forecast has also been revised down to 1.5pc in 2019 and 1.7pc in 2020 (Autumn Forecast: 1.9pc in 2019; 1.8pc in 2020).
According to the Commission's forecasts, 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 1.7pc in 2018, up from 1.5pc 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 1.4pc in 2019 before picking up mildly to 1.5pc in 2020. For the EU, inflation is forecast to average 1.6pc this year and then pick up to 1.8pc in 2020.
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. (UNI)