MNI POLICY: European Commission Cuts 2019 Growth Forecast

By Jason Webb

     LONDON (MNI) - The European Commission cut its forecast for 2019 eurozone

economic growth to 1.2%, from its winter forecast of 1.3%, as Germany's economy

cools faster than previously expected, it said on Tuesday.

     The EC's spring inflation forecast for 2019 was unchanged from the winter,

with the eurozone's harmonised consumer price index seen rising 1.4% this year.

Eurozone inflation is seen remaining at 1.4% in 2020, when GDP growth should

pick up to 1.5%.

     Germany is seen growing by 0.5% this year, down from 1.4% in 2018, although

growth in the eurozone's largest economy should pick up to 1.5% in 2020. In its

winter forecast, the EC had foreseen German growth of 1.1% in 2019.

     Risks to the outlook include that of protectionist measures worldwide and

any disappointment in Chinese growth. A no-deal Brexit is also a danger. But

private consumption and investment in the EU could prove more resilient than

expected, and would be further bolstered if it were accompanied by

stronger-than-assumed fiscal policy measures in countries with fiscal space.

     Growth in Italy is seen in positive territory in 2019, if only just, at

0.1% vs the 0.2% forecast in February. The Commission also sees Italy's budget

deficit at 2.5% this year, better than the 2.04% target in Rome's budget

procedure negotiations with Brussels.   

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$E$$$,M$X$$$,MT$$$$,M$XDS$]