Only Weak Economic Growth in the Euro Area
Growth in the euro area will be weak until the beginning of 2020, according to three research institutes: ifo in Munich, KOF in Zurich, and Istat in Rome. They expect growth to be only 0.2 percent in the third quarter and to reach just 0.3 percent in each of the two following quarters. This is down from 0.4 percent in the first quarter of 2019.
One factor serving as a brake on growth is industrial production, which shrank by 0.6 percent in the third quarter but is set to recover slightly, increasing by 0.2 and 0.3 percent in the next two quarters respectively.
Growth is being driven by private consumption, which is still supported by the good situation on the labor market and is expected to grow by 0.3 percent in both the third and fourth quarters of 2019 and in the first quarter of 2020.
Inflation will likely come in at 1.0 percent in the third quarter, 1.1 percent in the fourth quarter, and 1.4 percent in the first quarter of 2020. All these rates fall short of the European Central Bank’s target of below, but close to, 2.0 percent.
The greatest risks for the forecast are posed by turbulence in world politics: the trade wars, the threat of Brexit, and military attacks on oil supply installations. Possible negative consequences for world trade arising from this could adversely affect Germany’s growth as an export nation in particular, which in turn would have an impact on the rest of the euro area.
Eurozone Economic Outlook
Der Eurozone Economic Outlook ist ein Gemeinschaftsprojekt zwischen dem external pageifo Institutcall_made, dem external pageIstatcall_made und der KOF. Die Schätzungen und Prognosen werden unter Zuhilfenahme statistischer Prognoseverfahren durch die drei Institute erstellt. Eine detailliertere Analyse sowie Tabellen und Grafiken finden Sie als Download in der rechten Spalte.
Contact
KOF Konjunkturforschungsstelle
Leonhardstrasse 21
8092
Zürich
Switzerland