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--IMF See Eurozone '18 Annual Growth At 2.0%, Also Below July Update 2.2% Fcast
LONDON (MNI) - Growth across the Eurozone is expected to decelerate this
year, before softening modestly again in 2019, the International Monetary Fund
said in the latest edition of the World Economic Outlook released Tuesday
morning at its annual meeting in Bali.
--Weaker-than-expected outturns in the first half of the year have led to
downward growth revisions for both the euro area and the UK. The Fund forecasts
euro area GDP growth of 2.0% this year and 1.9% next year. That compares with an
April forecast of 2.4% and 2.0% for 2018 and 2019 respectively. In the UK, 2018
growth is now seen at 1.4%, down from a forecast of 1.6% in April.
--France, Germany, Italy and Spain, the currency bloc's largest economies,
all saw their growth forecasts for 2018 downgraded from April forecasts, with
France and Germany leading the revisions lower. The Fund now expects France to
grow 1.6% and Germany to grow 1.9% in both 2018 and 2019. Healthy consumer
spending and job creation amid supportive monetary policy are expected to
continue to provide strong aggregate demand, though at a moderating pace, the
IMF said. Italy's growth forecast is also lower than in the April 2018 WEO,
estimated at 1.2% for 2018 and 1% for 2019.
--In the UK, growth is projected to slow to 1.4% in 2018 and 1.5% in 2019.
This forecast represents a downward revision of 0.2 percentage point for 2018
relative to the April 2018 WEO, driven by weak growth in the first quarter of
the year, partly due to weather-related factors. Assumptions regarding the
Brexit outcome remain broadly unchanged relative to the April 2018 and October
2017 WEOs, the IMF added. "Tariffs on trade with the European Union are expected
to remain at zero, and nontariff costs will likely increase moderately," the WEO
--Headline inflation in the euro area is expected to be 1.7% in 2018 and
2019. With the recovery boosting growth above potential for 2018-19, core
inflation is expected to increase to 1.2% in 2018 and 1.6% in 2019, up from 1.1%
in 2017. HICP is projected to increase slowly to 2% by 2022.
--In the UK, as the pass-through effects of the pound depreciation fade,
core inflation isexpected to decline to 2.1% in 2018, down from 2.4% in 2017.
CPI is expected to stabilize at its medium-term level of 2.0% in early 2020.
Headline inflation is expected to edge down to 2.5% in 2018, from 2.7% in 2017,
with a gradual convergence to 2% projected in 2020.
With its latest round of forecasts, the IMF is now pretty much in line with
recent projections published by the European Commission and the European Central
--MNI London Bureau; tel: +44 203-586-2225; email: firstname.lastname@example.org
--MNI Washington Bureau; tel: +1 202-371-2121; email: email@example.com