European Union lowers eurozone 2020 growth forecast

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Forecasts for Italy remained unchanged, reiterating its economy will barely grow this year, seeing the worst growth rate in the whole EU.

GDP growth forecast for Estonia is 2.9 percent in 2019 and 2.3 percent in 2020, while inflation - 2.4 percent and 2.1 percent respectively.

In its latest Summer Economic Forecasts, the European Commission lowered the 2020 GDP growth forecasts for Eurozone, in the face of uncertainty over the United States trade policy. The resilience of our economies is being tested by persisting manufacturing weakness stemming from trade tensions and policy uncertainty.

European Commission Vice-President Valdis Dombrovskis holds a news conference at the EU Commission headquarters in Brussels, Belgium, June 5, 2019. Inflation will be 2.4% this year and 1.7% in 2020, according to the European Commission's economic forecast. Domestic demand, in particular household consumption, continues to be a driving force for economic growth in Europe thanks to the continuing increase in the labor market. As a result, the forecast for euro area GDP growth in 2019 remains unchanged at 1.2 percent, while the forecast for 2020 has been lowered slightly to 1.4 percent following the more moderate pace expected in the rest of this year (spring forecast: 1.5 percent).

The commission also said the uncertainty's major source is Brexit.

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Strong final demand growth should be reflected in a pick-up in imports of both goods and services in 2019.

Risks to the global economic outlook remain highly interconnected and are mainly negative.

Touching on tensions in the Middle East, the commission said that they could raise oil prices. This domestic demand replaced net exports as 2018's main growth driver for Malta. For all other incoming data, this forecast takes into consideration information up until 2 July.

The commission confirmed the economic slowdown in the euro zone was mostly caused by weaker growth in Germany, the euro zone's largest economy, and Italy, its third largest.

During this and next year, GDP is expected to grow in all EU Member States. Maric stressed that the corrected growth forecast for Croatia is among the three biggest in the European Union, along with those of Hungary and Romania.

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