Eurozone growth, inflation cut as risks from USA trade grow

Eurozone growth, inflation cut as risks from USA trade grow

Croatian Finance Minister Zdravko Maric welcomed on Wednesday the European Commission's revised forecast of the country's gross domestic product (GDP) in 2019 but stressed that growth should be persistent. These have continued to weigh on confidence in the manufacturing sector, which is the most exposed to worldwide trade, and are projected to weaken the growth outlook for the remainder of the year.

Policymakers deemed annual price growth of 1.6 percent now forecast for 2021 to be "some distance away" from that goal and said there was "no room for complacency" in the face of plummeting inflation expectations on financial markets.

"This could lead to rapid tightening of global financial conditions", he added.

Now its 10th year of expansion, the German economy returned to growth between January and March, posting a 0.4% expansion, but the Bundesbank expects a small contraction in the second quarter. The GDP forecast for Bulgaria is also unchanged - 3.3% in 2019. and 3.4% for 2020.

Commenting the Commission's forecast for Latvia, the Commission's Vice-President for the Euro and Social Dialog Valdis Dombrovskis said that Latvia's economic development this year was still being driven by strong domestic demand and increasing exports. Central and Eastern Europe, Malta, and Ireland) than in others (e.g. An extended economic confrontation between the U.S. and China, together with the elevated uncertainty around United States trade policy could prolong the current downturn in global trade and manufacturing and affect other regions and sectors. "Due to the assumed fall in fuel prices, energy prices are expected to have a somewhat lower impact on inflation than previously forecast", the Commission said. "On the domestic side, a no deal Brexit remains a major source of risk".

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"As labour shortages become more apparent in some sectors, wage growth is projected to accelerate".

This forecast is based on a set of technical assumptions concerning exchange rates, interest rates and commodity prices with a cut-off date of 28 June.

"There was broad agreement that, in the light of the heightened uncertainty. the governing council needed to be ready and prepared to ease the monetary policy stance further", read the minutes of the meeting, published four weeks after it was held in Lithuanian capital Vilnius.

The European Union economy is set for its seventh consecutive year of growth in 2019, with the economies of all member states due to expand.