European Commission has published its seasonal Autumn 2019 Economic Forecast
On 7 November 2019, the European Commission has published its seasonal Autumn 2019 Economic Forecast. Here are its main findings:
- Eu economy is in its seventh consecutive year of growth, labour markets remain strong and unemployment continues to fall.
- Less supportive external environment and uncertainty related to trade conflicts, rising geopolitical tensions, as well as Brexit are taking their tolls on the economy.
- The forecast suggests a decreasing speed of growth and inflation for the near future as the growth forecast has been downgraded compared to the Summer 2019 Economic Forecast by 0.2 percentage points in 2019, 2020 and 2021 (from 1.6%).
- The forecast points out that growth in Europe will likely to depend on domestically oriented sectors, due to the weak global trends.
- The unemployment figures are at a record low in the EU, the protracted growth is also expected to slow them down with a likely settle at 6.2% in 2020 and 2021.
- The Euro area inflation is forecast at 1.2% this year and rising to 1.3% in 2021. In the EU, inflation is forecast at 1.5% this year and rising to 1.7% in 2021.
- Despite lower GDP growth, the euro area's aggregate public debt-to-GDP ratio is forecast to continue declining for the fifth year in a row to 86.4% this year, 85.1% in 2020 and 84.1% in 2021. The same factors hold true for the EU, where the public debt-to-GDP ratio is forecast to fall to 80.6% this year to 79.4% in 2020 and 78.4% in 2021.
- The euro area's aggregate deficit is forecast to rise from an historic low of 0.5% of GDP in 2018 to 0.8% this year, 0.9% in 2020 and 1.0% in 2021, under a no-policy change assumption. In the EU the aggregate deficit is also expected to rise, from 0.7% of GDP in 2018 to 0.9% this year, 1.1% in 2020, and 1.2% in 2021.
- The forecast warns that a number of risks could lead to lower growth than forecast. A further increase in uncertainty or a rise in trade and geopolitical tensions could dampen growth, as well as a disorderly Brexit and the possibility that weakness in the manufacturing sector could have a bigger spillover effect on domestically-oriented sectors.
Source: European Commission