Eurozone Economic Forecast

Eurozone Economic Outlook

January 29, 2019

Downbeat data continues to ebb in surrounding the Eurozone economy, suggesting that a slower growth path remains in play after a solid 2017 A downturn in the industrial sector in the third quarter due to supply-side constraints and tepid demand appears to have persisted into the fourth quarter, with industrial production contracting at the sharpest pace in over two years in November and the composite PMI falling in December. Moreover, economic sentiment deteriorated notably throughout 2018, ending the year at an almost two-year low. That said, a tightening labor market is providing some relief to the economic narrative, with the unemployment rate falling to a fresh multi-year low in November. In the political arena, the scene is also troubling. The possibility of a hard Brexit has increased somewhat after policymakers in the UK rejected Prime Minister Theresa May’s withdrawal agreement in mid-January and remain deeply divided on how to proceed with the country’s exit from the European Union. Met the why particular panelists remain divided on how events will unfold, although most think some sort of agreement will be struck. In addition, the threat of new U.S. tariffs continues to loom large, while at home, fragile governments in Italy and Spain could present legislative challenges or spark snap elections.

Eurozone Economic Growth

Met the why particular panelists shaved 0.1 percentage points off the Eurozone’s growth forecast this month, and now see GDP expanding 1.5% in 2019. Sluggish global trade and downturns in key trading partners will likely weigh on exports growth this year, and this could be aggravated further if threats of rising global protectionism play out. Next year, growth is seen stable at 1.5%.

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Eurozone Facts

Exchange Rate1.140.65 %Jan 30
Stock Market1,096-0.52 %Jan 30

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