In its monthly bulletin, ECB noted that “euro area economic expansion remains solid and broad-based across countries and sectors, despite recent weaker than expected data and indicators.” In the June Eurosystem macroeconomic projections, annual real GDP growth is projected to be at 2.1% in 2018, 1.9% in 2019 and 1.7% in 2020.. HICP inflation is projected to be at 1.7% in 2018, 2019 and 2020.
On the global scale, ECB noted, that “following a year of strong and highly synchronised growth, global momentum slowed somewhat in the early part of 2018.” While, growth is expected to rebound in near term, it warned that “the implementation of higher trade tariffs, amid ongoing discussions of further protectionist measures, represents a risk to the global economic outlook.”
The US steel and aluminium tariffs so far “affect only a small proportion of global trade and are expected to have only a small global macroeconomic effect”. However, “the risks of further protectionist steps have risen”. Firstly, US “threatened to increase tariffs on USD 50 billion of Chinese goods, to which China pledged to retaliate. Secondly, “the United States launched an investigation into the national security implications of automobile imports.”
ECB added that “expectations of an escalation in the dispute could affect investment decisions, with potential effects on global growth”. And, “risks to global activity from a widespread rise in protectionism could be significant.”
