EC Expects Croatia's GDP Growth to Pick up to 3.1%

EC Expects Croatia's GDP Growth to Pick up to 3.1%

EC Expects Croatia's GDP Growth to Pick up to 3.1%

The European Central Bank decided on Thursday (6 June) to keep the low interest rates unchanged at least until mid-2020, and confirmed that it is considering further monetary stimulus, including further rate cuts and restarting the asset purchasing programme, to counter the trade tensions and Brexit uncertainty. Growth was also favored by fiscal policy measures, which made household disposable income in a number of Member States rising.

In the first quarter of the year, growth in the euro area was higher than expected due to a number of temporary factors, such as mild winters and rising vehicle sales.

"Real GDP growth is forecast to pick up to 3.1% in 2019 as a whole before moderating to 2.7% in 2020", the Commission says in its interim European Economic Forecast for the summer 2019.

It is now predicting 1.2% GDP growth for the eurozone in 2019. The downgrade was attributed to an outlook "clouded by external factors including global trade tensions and significant policy uncertainty", which was weighing on the manufacturing sector.

The Commission's forecast said that the evolution of the eurozone economy will depend on "the resilience of the services sector and the labour market in the face of manufacturing weakness; the robust growth in Central and Eastern Europe, which contrasts with the slowdown in Germany and Italy; and the missing pass-through from higher wages to core inflation".

In the previous Economic Forecast paper issued in May, Croatia's economy was forecast to rise 2.6% this year, and the pace of growth was to decelerate to 2.5% in 2020.

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Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said:"The European economy continues to expand against a hard global backdrop".

"This could lead to rapid tightening of global financial conditions", he added.

The Commission also believes that Malta will achieve the fastest economic growth in the bloc this year - 5.3 percent, followed by Hungary and Poland (4.4 percent in each).

In light of the process of the withdrawal of the United Kingdom from the European Union, projections for 2019 and 2020 are again based on a purely technical assumption of status quo in terms of trading patterns between the EU27 and the UK.

The European Commission's next economic forecast will be the autumn economic forecast in November 2019.

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