News Worms
News Worms


European Union autumn forecast 2017: looking good

However, citing slowing employment growth, lower increases in real disposable incomes and moderating investment growth, the commission said Eurozone growth would moderate slightly over the forecast horizon, to 2.1 percent in 2018.

The Commission had previously forecast growth for the year of 1.7 percent, but its autumn economic outlook sharply revises the figure on the back of surprisingly strong GDP growth figures announced for the third quarter last month.

According to its Autumn Forecast released today, the European Commission expects growth to continue in both the euro area and in the EU at 2.1% in 2018 and at 1.9% in 2019 (Spring Forecast: 2018: 1.8% in the euro area, 1.9% in the EU).

The upgrades take into account a run of upbeat economic news from the eurozone as risks to the outlook, such as worries over the rise of populist politicians and Greece's future in the single currency bloc, have dissipated.

The optimism, the commission said, is fueled by increased private consumption, favorable lending conditions, improved economic growth around the world and falling unemployment in Europe.

France, the other eurozone country under a deficit procedure, will also decrease its deficit, to 3 percent this year.

Still, the Commission noted a series of risks such as elevated geopolitical tensions, the extension of protectionist trade policies, Britain's exit from the European Union and the rise in the euro. The economy would slow even further to 1.3 percent in 2018, followed by 1.1 percent in 2019. "Looking ahead, growth is set to decelerate but remain above potential".

"We think, at this stage, that the macroeconomic impact is limited, nearly negligible", Mr. Moscovici said of the secessionist move that Madrid has moved to quash.

Macron is now pushing through significant labor reforms in France and hopes around those reforms, combined with his repeated calls for enhanced European economic cooperation and consolidation, have helped push growth expectations for France for 2017 up to 1.6 percent from the earlier 1.4 percent.

The closure of the second review in June 2017, together with the stronger-than-expected growth in the euro area and a favourable tourist season, are expected to strengthen the economy in the remainder of the year. The unemployment rate is projected to fall to 6.4% in 2017 and to gradually reach 5.7% in 2019.The Commission's assessment of the general government budget coincides with the fiscal policy objectives set out in the three-year budgetary projections 2018-2020, namely: a balanced budget in 2017 and 2018 and a surplus in 2019.

Despite this growth, the Commission states in its report that the Croatian GDP would return to the level before the crisis in two years.

One laggard is Britain, where growth has come off the boil amid uncertainty over Brexit.

"After five years of moderate recovery, European growth has now accelerated", said Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs.

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