EC Lowers Eurozone Growth Outlook

The European Commission downgraded its growth projections for the euro area as the economy faces a period of very high uncertainty.

In the Autumn forecast, the EC said on Thursday that the European economy has entered a protracted period of subdued growth amid weak global growth, trade tensions and uncertainties over Brexit.

The single currency bloc is forecast to expand 1.1 percent this year instead of 1.2 percent estimated previously. Growth is seen at 1.2 percent each in 2020 and 2021. The outlook for 2020 was downgraded from 1.4 percent.

Inflationary pressures are set to be more moderate than expected in spring, lowering the inflation forecast for 2019 and 2020 to 1.2 percent, followed by slight uptick to 1.3 percent in 2021, the commission said.

Germany's economy is expected to see muted growth over the forecast horizon. GDP is expected to increase by only 0.4 percent this year, and by just 1 percent in 2020 and 2021.

Spain's growth forecasts were revised downward due to both data revisions and a weaker growth momentum amid increased uncertainty. In 2019, the economy was forecast to climb 1.9 percent. For 2020, growth was forecast at 1.5 percent and at 1.4 percent in 2021.

France's real growth is set to decrease in 2019 before leveling out a rate close to the economy's potential. Underpinned by domestic demand, GDP is forecast to grow by 1.3 percent in 2019 and 2020 and then by 1.2 percent in 2021.

The EU said Italy still shows no signs of a meaningful recovery. GDP is expected to edge up 0.1 percent this year. In 2020, growth is set to pick up moderately to 0.4 percent on the back of rising external demand and moderate household spending. For 2021, growth is seen at 0.7 percent.

Amid Brexit uncertainty, UK's pace of economic growth has been volatile in 2019. The growth is seen at 1.3 percent this year. Then growth is forecast to be 1.4 percent in 2020 and 2021.

In the latest Economic Bulletin, released Thursday, the European Central Bank said incoming economic data and survey information continue to point to moderate but positive growth in the euro area in the second half of this year.

The International Monetary Fund on Wednesday warned that there are signs that slowdown in European trade and manufacturing is spreading into the rest of the economy.

According to IMF's Regional Economic Outlook for Europe, euro area is forecast to grow 1.2 percent in 2019 before improving marginally to 1.4 percent in 2020.