BRUSSELS, 8 August (Reuters) – The European Commission, the European Union's (EU) executive body, said on Wednesday that the economic outlook for the quarter would reduce growth prospects in the euro area next year and that the slowdown would continue until 2020 respectively. He pointed out the risk of expanding spending by member countries with high debt levels such as US economic policies, British departures from the European Union and Italy.
Despite lowering the expected growth rate as expected, it is possible that the European Central Bank (ECB) will complicate the release of quantitative easing policies scheduled for this year. However, at the same time, the European Commission has raised the outlook for inflation in the euro zone this year and next year to 1.8%, and is close to the target of around 2% targeted by the ECB.
The euro zone's economic growth rate is estimated at 2.1% this year, which will slow from 2.4% last year. Next year's predictions have been reduced from 2.0% to 1.9%.
We anticipate a further slowdown to 1.7% in 20 years. This time for the first time the European Commission has shown prospects for the same year.
Estimates of the German growth rate for Germany's largest economy fell 1.7% this year from 1.9%. That was also lower than 2.2% in 17 years. In 19 years it was reduced from 1.9% to 1.8%. We expect 1.7% in 20 years.
The European Commission also reduced growth forecasts in France and Italy. Italy will continue to be the lowest growth rate in the euro area.[nL4N1XJ5J5]
For the EU as a whole, the growth rate for this year is estimated at 2.1%, 1.9% next year, 1.8% in 20 years.
Concerning risk, it is possible that the overheating of the US economy caused by "cyclic fiscal stimulus measures in the US" can make the rate of increase in interest rates faster than expected, which will cause a variety of negative ripple effects. He also warned about the risk of trade friction due to the Trump regime's policies.
Italy, which places expansion in spending on policy, also shows that it is a risk. "Doubts about the quality and sustainability of the fiscal quality of member countries with high levels of debt can spread to the domestic banking sector and create concerns over financial stability, which can be an emphasis on economic activity," he said.