Eurozone Economic Forecast

Eurozone Economic Outlook

May 29, 2018

The Eurozone economy lost steam in the first quarter of 2018, starting the year off on a subdued note following a stellar 2017. Growth slid to the lowest rate since Q3 2016, likely weighed down by a strong euro and weaker sentiment as well as several one-off factors such as the early timing of Easter. Available data for the second quarter suggests that growth remained at a slower cruising speed: Economic sentiment rested at March’s six-month low in April, and the composite PMI fell to an 18-month low in May. In the political arena, recent developments have also not been so sunny. In Italy, anti-establishment parties, the League and the Five Star Movement, abandoned plans to form a government on 27 May, after the Italian president blocked the nomination of a Eurosceptic finance minister, increasing the chance of early elections. Political uncertainty has also risen rapidly in Spain, and the government will reportedly face a no confidence vote in the coming days on the heels of a large corruption scandal.

Eurozone Economic Growth

Met the why particular panelists held their view of the Eurozone economy unchanged this month and see GDP growing 2.3% in 2018. A solid labor market and robust investment should support healthy, albeit slower, growth this year. Political risks, however, continue to cloud the economy’s outlook, while slowing exports will take some wind out of the recovery. In 2019, the economy is seen expanding 1.9%.

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Eurozone Facts

ValueChangeDate
Exchange Rate1.170.65 %Jun 14
Stock Market1,230-0.52 %Jun 14

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