European Commission cuts Eurozone growth forecasts on unfavorable external environment, upgrade inflation projections

European Commission released summer 2018 Interim Economic Forecast today.

On Eurozone growth:

• 2018 GDP is projected to grow 2.1%, revised down from Spring forecast of 2.3%.
• 2019 growth is projected to grow 2.0%, unchanged.

On Eurozone inflation:

• 2018 CPI is projected to be at 1.7%, revised up from 1.5%
• 2019 CPI is projected to be at 1.7%, revised up from 1.6%

On EU 28 growth:

• 2018 GDP is projected grow 2.1%, revised down from 2.3%.
• 2019 GDP is projected grow at 2.0%, unchanged.

On EU 28 inflation:

• 2018 CPI is projected to be at 1.9%, revised up from 1.7%
• 2019 CPI is projected to be at 1.8%, unchanged

On some countries

• Germany GDP growth forecast at 1.9% in 2018, revised down from 2.3%.
• Germany GDP growth forecast at 1.9% in 2019, revised down from 2.1%.
• France GDP growth forecast at 1.7% in 2018, revised down from 2.0%.
• France GDP growth forecast at 1.7% in 2019, revised down from 1.8%.
• Italy GDP growth forecast at 1.3% in 2018, revised down from 1.5%.
• Italy GDP growth forecast at 1.1% in 2019, revised down from 1.2%.
• UK GDP growth forecast at 1.3% in 2018, revised down from 1.5%.
• UK GDP growth forecast at 1.2% in 2019, unchanged

Quotes from the release:

Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said: “European economic activity remains solid with 2.1% GDP growth forecast for the euro area and the EU28 this year. Nevertheless, the downward revision of GDP growth since May shows that an unfavourable external environment, such as growing trade tensions with the US, can dampen confidence and take a toll on economic expansion. The growing external risks are yet another reminder of the need to strengthen the resilience of our individual economies and the euro area as a whole.”

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “Growth in Europe is set to remain resilient, as monetary policies stay accommodative and unemployment continues to fall. The slight downward revision compared to the spring reflects the impact on confidence of trade tensions and policy uncertainty, as well as rising energy prices. Our forecast is for a continued expansion in 2018 and 2019, although a further escalation of protectionist measures is a clear downside risk. Trade wars produce no winners, only casualties.”

Full release here: