Eurozone Economic Forecast

Eurozone Economic Outlook

August 27, 2019

Preliminary estimates revealed that growth halved in the second quarter, returning to the slow pace seen in the last half of 2018. Although a breakdown by drivers is not yet available, a persistently weak industrial sector, downbeat confidence and a worsening global backdrop likely dented momentum. Early data for the third quarter has continued to underwhelm. Economic sentiment fell to a near three-year low in July and the composite PMI also dropped. Moreover, the PMI continued to point to a two-speed economy, with the services sector growing briskly while manufacturing activity remained weak; however, concerns of spillover are growing. Meanwhile, the economic environment remains bleak amid concerns over trade wars, Brexit and political turmoil in Italy. Against this backdrop and considering modest inflation, the ECB is expected to unveil a broad stimulus package at its September meeting to boost the outlook.

Eurozone Economic Growth

Growth is seen slowing sharply this year due to lingering weakness in the industrial sector, a less favorable global backdrop and as geopolitical concerns hamper investment and exports. Risks to the outlook remain elevated and include rising global protectionism, slower-than-expected growth in China, a hard Brexit and other political concerns. Growth is seen at 1.1% in 2019, which is unchanged from last month’s forecast, and 1.2% in 2020.

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Eurozone Facts

ValueChangeDate
Exchange Rate1.100.65 %Sep 04
Stock Market1,175-0.52 %Sep 04

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