Market news
13.02.2020, 10:20

European Commission keeps Eurozone growth forecast at 1.2% for 2020, 2021

  • Raises German GDP forecast to 1.1% for 2020, 2021 (previously 1.0%)

  • Cuts French 2020 GDP forecast to 1.1% (previously 1.3%), keeps 2021 forecast at 1.2%


  • The European economy continued to weather external headwinds in the second half of 2019 thanks to the strength of domestic drivers.

  • Growth in the euro area turned out better than expected in the third

  • quarter but disappointed at the end of the year.

  • Leading indicators suggest that manufacturing output may stabilise in the months to come, although an upturn is not yet on the cards.

  • However, with hints of a bottoming out in global trade flows, and as the dampening impact of domestic inventory adjustment fades, a trough may have been reached.

  • With continued real income gains, a supportive policy mix and a construction sector buoyed by low borrowing costs, the European economy is well placed to navigate the challenging external environment, high trade policy uncertainty and dampening structural factors.

  • This is, however, a fragile equilibrium, which could be easily derailed by unforeseen events.

  • Overall, the European economy remains on a path of steady and moderate growth.

  • Over the next two years, annual GDP growth in the euro area is expected to settle at 1.2%, the same as in 2019.

  • The outlook for 2020 and 2021 is unchanged since the autumn, as more positive developments are counterbalanced by negative events elsewhere.

  • On the back of supportive monetary policy, slightly higher oil price assumptions and some upward momentum in underlying price pressures, euro area headline inflation has been revised slightly upwards, to 1.3% in 2020 and 1.4% in 2021.

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