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9 Nov, 2019 07:04

Challenging road ahead: EU cuts economic growth rate all the way through 2021

Challenging road ahead: EU cuts economic growth rate all the way through 2021

The European Commission has downgraded the growth forecast for the euro area, warning of “a protracted period of subdued growth and low inflation in the context of high uncertainty.”

Gross domestic product is forecast to expand by 1.1 percent in 2019 and by 1.2 percent in 2020 and 2021. This is down by 0.1 percentage points for 2019 and 0.2 percentage points for 2020 compared with its projections in July.

Bruising trade wars, a slowing global economy, and a looming Brexit have combined to hit nearly every sector of the economy, said the commission.

The European economy is in its seventh consecutive year of expansion, but the bloc now “looks to be heading towards a protracted period of more subdued growth and muted inflation.”

It added that “the external environment has become much less supportive and uncertainty is running high. This is particularly affecting the manufacturing sector, which is also experiencing structural shifts.”

According to Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs: “All EU economies are set to continue expanding over the coming two years, in spite of increasingly strong headwinds.”

He said the fundamentals of the EU economy are robust as after six years of growth, unemployment in the EU is at its lowest. “But the challenging road ahead leaves no room for complacency. All policy levers will need to be used to strengthen Europe’s resilience and support growth.”

For more stories on economy & finance visit RT's business section