The interim summer economic forecasts, presented by the European Commission on Thursday 12 July, anticipate growth of 2.1% of GDP in 2018 and 2% in 2019, in both the European Union and the Eurozone.
Although economic expansion is therefore expected to continue, this forecast, which is down by 0.2% for 2018 compared to the spring economic forecasts (see EUROPE 12014), comes against the backdrop of political and economic uncertainty.
Pierre Moscovici, the Commissioner for Economic and Financial Affairs, was nonetheless reassuring. “The foundations of the European economy remain solid”, he told the press. He also noted that the employment situation had “continued to improve” in the EU.
The increase in energy prices has led to an upwards revision of the inflation forecast for 2018, to 1.7% in the Eurozone and 1.9% in the EU (0.2% compared to the spring economic forecast).
However, Moscovici did not deny certain concerns currently weighing down the European economy, referring to “downwards risks that we cannot underestimate”, first and foremost among them international trade.
Although the impact of the protectionist measures set in place by the US President Donald Trump have so far been limited, he said that the “risk of escalation was certainly present” and that new measures could “weigh down growth”.
The other downwards risks identified by the Commission include geopolitical tension and political uncertainty in various member states, due to such matters as Brexit.
The European institution reports in particular that the downwards risks have increased in Italy, due to the uncertainty over the economic policies of the government of Giuseppe Conte, which have increased the costs of refinancing the Italian debt.
Differences in growth rates. Although expansion is expected to continue in 2018 and 2019, the rates forecast by the Commission differ significantly between member states.
Italy's GDP is expected to grow by 1.3% and 1.1% this year and next year respectively, whilst the Commission's forecasts for Ireland are 5.6% and 4.0%. The Commission predicts a growth rate of 1.7% of GDP in France for both years, 1.9% of GDP in Germany and 1.9% and 2.3% of GDP in Greece.
Concerning Greece, the Commission expects growth to continue over the next few years, if the commitments made by Athens in the framework of the conclusion of the third financial bailout plan are kept (see EUROPE 12046). (Original version in French by Lucas Tripoteau)