The European Commission lowered 2019 Eurozone growth forecast by 0.1% to 1.9%, then slow to 1.7% in 2020. HICP inflation forecast for both 2018 and 2019 are raised by 0.1% to 1.8%. However, HICP inflation is projected to slow down to 1.6% in 2020.
In the release European Commission warned that “rising global uncertainty, international trade tensions and higher oil prices will have a dampening effect on growth in Europe”. And looking ahead “the drivers of growth are set to become increasingly domestic”.
There are two interesting points to note. Firstly, inflation is forecast to move away from ECB’s 2% target in 2020, reflecting further slowdown in activity. Does that mean ECB shouldn’t raise interest rates in 2019? Secondly, Italy’s budget deficit is projected at -2.9% of GDP in 2019, way higher than its government’s own target of -2.4%. In 2020, Italy’s deficit is even projected to exceed EU’s limit of -3%.
This is a quick summary:
GDP growth at
- 2.1% in 2018 vs 2.1% (Summer) vs 2.3% (Spring)
- 1.9% in 2019 vs 2.0% (Summer) vs 2.0% (Spring)
- 1.7% in 2020
HICP inflation at
- 1.8% in 2018 vs 1.7% (Summer) vs 1.5% (Spring)
- 1.8% in 2019 vs 1.7% (Summer) 1.6% (Spring)
- 1.6% in 2020
And, the full table by country:
