In ECB’s post meeting press conference, President Mario Draghi said there are signs that “some of the idiosyncratic domestic factors dampening growth are starting to fade”. However, the weakening in data points to a “sizeable moderation in the pace of the economic expansion that will extend into the current year”. Underlying inflations “continues to be muted”. And weaker economic momentum is “slowing the adjustment of inflation” towards target.
Draghi added that Incoming have continued to be weak, in particular in manufacturing, “reflecting the slowdown in external demand compounded by some country and sector-specific factors”. And the impact is “turning out to be somewhat longer-lasting”Thus near-term growth outlook will be weaker than previously anticipated
In the new staff projections, GDP growth was “revised down substantially in 2019 and slightly in 2020”. GDP is projected to grow by 1.1% in 2019, 1.6% in 2020 and 1.5% in 2021. They compare to December’s projection of 1.7% in 2019, 1.7% in 2020 and 1.5% in 2021. Risks surrounding outlook are “still tilted to the downside”, due to “geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets.”
HICP inflation is projected to be at 1.2% in 2019, 1.5% in 2020 and 1.6% in 2021. They compare to December’s projection of 1.6% in 2019, 1.7% in 2020 and 1.8% in 2021.