However, the external environment has become much less supportive and uncertainty is running high. As a result, the European economy looks to be heading towards a protracted period of more subdued growth and muted inflation.
Euro area gross domestic product (GDP) is now forecast to expand by
1.1% in 2019
and by 1.2% in 2020 and 2021.
Compared to the Summer 2019 Economic Forecast (published in July), the growth forecast has been downgraded by 0.1 percentage point in 2019 (from 1.2%) and 0.2 percentage points in 2020 (from 1.4%).
For the EU as a whole, GDP is forecast to rise by 1.4% in 2019, 2020 and 2021. The forecast for 2020 was also revised down compared to the summer (from 1.6%).
Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said: “So far, the European economy has shown resilience amid a less supportive external environment: economic growth has continued, job creation has been robust, and domestic demand strong. However, we could be facing troubled waters ahead: a period of high uncertainty related to trade conflicts, rising geopolitical tensions, persistent weakness in the manufacturing sector and Brexit. I urge all EU countries with high levels of public debt to pursue prudent fiscal policies and put their debt levels on a downward path. On the other hand, those Member States that have fiscal space should use it now.”
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “All EU economies are set to continue expanding over the coming two years, in spite of increasingly strong headwinds. The fundamentals of the EU economy are robust: after six years of growth, unemployment in the EU is at its lowest since the turn of the century and the aggregate deficit below 1% of GDP. But the challenging road ahead leaves no room for complacency. All policy levers will need to be used to strengthen Europe’s resilience and support growth.”
The full press release is available in all languages here.
The Autumn 2019 Economic Forecast is available here, a only Croatia here.