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European Commission ups eurozone growth, inflation forecasts

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Staff Writer | February 13, 2017
European Commission
Economy in Europe   Eurozone GDP to grow 1.6 percent

Eurozone growth is set to ease this year, but the slowdown would be less severe than earlier expected, despite a high degree of uncertainty clouding the outlook, the European Commission said.

Gross domestic production of the single currency region is expected to grow 1.6 percent this year after 1.7 percent growth in 2016, the European Commission said in its Winter 2017 Forecast. Growth for this year was earlier seen at 1.5 percent.

The euro area forecast for next year was raised to 1.8 percent from 1.7 percent. Growth is expected to be driven by domestic demand.

The growth projection for EU for this year was raised to 1.8 percent from 1.6 percent.

"Uncertainty is rising to an extraordinarily high level, driven by the uncertain outcome of the UK's 'Brexit' negotiations and by upcoming elections in a number of large Member States," the commission said.

"The outcome of the U.S. presidential election adds some upside risks related to fiscal stimulus, but has also raised the possibility of isolationist and protectionist policies that would hurt the global and European economy, should they be enacted."

The inflation forecast for this year was raised to 1.7 percent from 1.4 percent. The projection for next year left unchanged at 1.4 percent.

"The depreciation of the euro against the dollar and rising global input price pressures are set to drive import prices further up in 2017, contributing to a rise in headline inflation this year," the report said.


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