MNI POLICY: European Commission Trims 2019 Growth Forecast

By Les Commons

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

economic growth to 1.1%, from its July forecast of 1.2%, as Germany's economy

continues to cool faster than previously expected, it said on Thursday.

     The EC's Autumn inflation forecast for 2019 was unchanged from July, with

the eurozone's harmonised consumer price index seen rising 1.2% this year.

Eurozone inflation is seen remaining at 1.2% in 2020, when GDP growth should

also pick up to 1.2%.

     Germany is set to grow by 0.4% this year, down from the 0.5% seen in the

July forecasts, although growth in the eurozone's largest economy should pick up

to 1.0% in 2020. In its July forecast, the EC had foreseen German growth of 1.4%

in 2020.

     Risks to the outlook remain those of protectionist measures worldwide and

any disappointment in Chinese growth. A disorderly 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 space to do so.

     The Autumn reports also notes that an easing in these tensions and a

pick-up in China growth would support growth across the euro area.

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

0.1%, unchanged from the July forecast.

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

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