BRUSSELS (Reuters) – The European Commission on Thursday cut the forecast for the euro zone’s economic growth in 2018, explaining this by the tension in trade relations with the US and the rise in oil prices, which push up inflation in the bloc.
The slowdown in GDP growth in the eurozone is expected to affect all major economies, but it will hit Italy harder, the rate of growth of which is the slowest in the European Union, matched the British.
The European Commission said it expects GDP growth of the eurozone by 2.1 percent in 2018 compared to 2.3 percent, announced in the May forecast. In 2019, growth will slow to 2.0 percent.
“The downward revision of GDP growth since May shows that an unfavorable external environment, such as growing trade tensions with the U.S., can dampen confidence and take a toll on economic expansion,” EU commission’s vice-president Valdis Dombrovskis said.
The worsening of the forecast was also promoted by the rise in oil prices, which is expected to push inflation in the euro area up to 1.7 percent in 2018 and 2019, the EU economics commissioner Pierre Moscovici said. Earlier, the European Commission predicted inflation at 1.5 and 1.6 percent in 2018 and 2019.
The GDP growth of Germany and France, the two largest economies of the euro area, is also expected to slow in 2018 and 2019.
The European Commission lowered Germany’s GDP growth forecast to 1.9 percent this year and the next, while it previously expected the figure to be 2.3 percent in 2018 and 2.1 percent in 2019.
The GDP growth of France will be 1.7 percent this year and next. Earlier, the European Commission predicted a rate of 2.0 percent in 2018 and 1.8 percent in 2019.
GDP growth in Italy and Britain is expected to be 1.3 percent in 2018.