Eurozone Economic Forecast

Eurozone Economic Outlook

March 3, 2020

A second estimate confirmed that the Eurozone economy cooled markedly in the final quarter of 2019, while weak available data and the coronavirus outbreak bode ill for the first quarter of this year. A notable downturn in the industrial sector against the backdrop of global trade tensions, subdued demand from key trading partners and sustained political uncertainty weighed on the economy in the fourth quarter. Turning to Q1 2020, still-weak consumer and business confidence in January-February suggest economic activity will remain feeble. Moreover, the outbreak of coronavirus in Italy and its spread to other Euro area countries look set to hit the manufacturing and tourism sectors. In politics, the resignation of Annegret Kramp-Karrenbauer, Merkel’s obvious successor, highlights tensions between government coalition partners, stoking political uncertainty in Europe’s largest economy.

Eurozone Economic Growth

The economy should grow only modestly this year. Trade uncertainty and weak global backdrop will restrain exports and hit investment and industrial activity. Moreover, cooling employment growth and higher savings are set to constrain household spending. Political uncertainty, the impact of coronavirus, U.S.-EU trade tensions and Brexit pose the main downside risks. Growth is seen at 1.0% in 2020, which is unchanged from last month’s forecast. In 2021, GDP is seen increasing 1.2%.

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Eurozone Facts

Value Change Date
Exchange Rate1.120.65 %Dec 31

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