The European Commission on Thursday cut its forecasts for the
eurozone's economic growth this year, citing among the top causes for
its revision trade tensions with the United States, as well as rising
oil prices, which are expected to push the bloc's inflation higher.
The slowdown of the eurozone economy is set to affect all major economies of the bloc, but is expected to hit Italy harder, as the country is forecast to record the lowest growth rate in Europe, matched only by Britain among all 28 EU countries.
The EU executive estimated the 19-country eurozone will grow by 2.1 percent this year, lower than the 2.3 percent gross domestic product (GDP) increase it had forecast in its previous estimates released in May, and below the 2.4 percent growth recorded last year.
In 2019, the bloc's growth should slow to 2.0 percent, unchanged from the previous forecast.
But what do these forecasts — and changes in forecasts — actually mean?
To get a sense of how forecasts can differ from actual results, see the charts. The first shows how GDP actually changed (light blue) and how it was forecast by the Commission to change (blue-and-black hatched bars) in 2017 compared to the previous year. The second chart, further below, compares actual and forecast changes in the consumer price inflation for 2017 compared to 2016.
The take-home message here is that the forecasts the Commission is currently making about next year's GDP or inflation numbers will likewise prove, in retrospect, to be wrong. Nonetheless, the forecasts are useful as a snapshot of Commission economists' perceptions of current trends, reflected in available economic data as these are processed in their economic models.
Read more: EU economic growth forecast reduced | Business| Economy and finance news from a German perspective | DW | 12.07.2018
The slowdown of the eurozone economy is set to affect all major economies of the bloc, but is expected to hit Italy harder, as the country is forecast to record the lowest growth rate in Europe, matched only by Britain among all 28 EU countries.
The EU executive estimated the 19-country eurozone will grow by 2.1 percent this year, lower than the 2.3 percent gross domestic product (GDP) increase it had forecast in its previous estimates released in May, and below the 2.4 percent growth recorded last year.
In 2019, the bloc's growth should slow to 2.0 percent, unchanged from the previous forecast.
But what do these forecasts — and changes in forecasts — actually mean?
To get a sense of how forecasts can differ from actual results, see the charts. The first shows how GDP actually changed (light blue) and how it was forecast by the Commission to change (blue-and-black hatched bars) in 2017 compared to the previous year. The second chart, further below, compares actual and forecast changes in the consumer price inflation for 2017 compared to 2016.
The take-home message here is that the forecasts the Commission is currently making about next year's GDP or inflation numbers will likewise prove, in retrospect, to be wrong. Nonetheless, the forecasts are useful as a snapshot of Commission economists' perceptions of current trends, reflected in available economic data as these are processed in their economic models.
Read more: EU economic growth forecast reduced | Business| Economy and finance news from a German perspective | DW | 12.07.2018
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