Economy

France, Spain to make European Union deficit deadline, Italy's debt to fall - Commission

France, Spain to make European Union deficit deadline, Italy's debt to fall - Commission

The EC publishes such forecasts three times a year.

Italy remained in last place for growth in the European Commission's economic forecasts for 2017, 2018 and 2019.

Growth, the commission points out, has already slowed significantly in the United Kingdom in the last couple of years, falling from 2.3% in 2017, to just 1.8% in 2016. It said growth this year would likely be 2.3 percent, up from 1.9 percent, while next year's would be 2.1 percent, also up from 1.9 percent. This trend of imports is expected to continue in 2018 and reverse in 2019.Annual HICP inflation is expected to reach 1.0% in 2017 due to strong domestic demand, higher administrative prices for utilities, and recovery in the prices of energy and commodity prices.

The EC forecast did not mention the Catalonian crisis and actually raised growth forecasts for Spain up to a healthy 3.1 percent for 2017.

Private consumption is believed to become the main driver of growth on the back of an increasing population and growing disposable income; with domestic demand playing a secondary role to external demand.

France's growth outlook for this year was lifted to 1.6 percent from 1.4 percent and that for next year was left unchanged at 1.7 percent.

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.

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Inflation is forecast to pickup gradually in the remainder of 2018 and throughout 2019.

The Turkish economy is also expected to grow 4.1 percent in 2019. The gap is seen declining to 0.9% next year, down from the previous estimate of 1.3%, and to 0.8% in 2019.

The unemployment rate forecast for euro area for this year was slashed to 9.1 percent from 9.4 percent.

However, overall current revenue growth is predicted to slow down next year, due to expected lower income from the citizenship scheme.

While the overall outlook was positive, the European Union executive's main areas of concern center on continuing geopolitical tensions between the U.S. and North Korea, issues within the Chinese economy, particularly around protectionism, and of course, the outcome of the ongoing Brexit negotiations.

The UK growth forecast for this year was slashed to 1.5 percent from 1.8 percent. The commission stressed that its post-Brexit economic forecasts were based on a purely technical assumption of status quo in EU-U.K. trade relations.

The upgrades take into account strong economic indicators from the eurozone as risks to the outlook, largely related to a series of elections in Europe this year, have dissipated.


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