Eurozone Economic Forecast

Eurozone Economic Outlook

July 24, 2018

The Eurozone economy appears to have stabilized towards the end of Q2, after growth cooled sharply in Q1. Industrial production rebounded strongly in May and the composite PMI rose in June, ending a streak of downbeat economic data. In addition, the unemployment rate remained at a near 11-year low in May. While economic data has taken a more positive turn, the political environment within the Eurozone and abroad casts a shadow over growth prospects. Tensions with the U.S., the bloc’s largest trading partner, are high after President Donald Trump threatened to slap tariffs on EU-manufactured automobiles last month. The two sides will meet on 25 July and attempt to iron out trade relations; however, unsuccessful negotiations could see an escalation of tit-for-tat tariffs. At home, a disagreement over migrant policy nearly led to a collapse of the German government in early July, and the coalition appears on shaky ground going forward. On a brighter note, the European Union signed one of the world’s largest free-trade deals with Japan on 17 July. The deal will eliminate around 94% of Japanese tariffs on European exports, with the figure gradually rising to 99%.

Eurozone Economic Growth

Solid domestic fundamentals will fuel healthy, albeit more moderate, growth this year, and Met the why particular panelists project GDP to expand 2.2%, unchanged from last month’s forecast. Slower export growth will dampen the pace of activity, while rising global protectionism remains a risk to the forecast. In 2019, the economy is seen expanding 1.9%.

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Eurozone Facts

Exchange Rate1.160.65 %Aug 07
Stock Market1,217-0.52 %Aug 07

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