Published: Fri, November 10, 2017
Markets | By Rosalie Gross

Eurozone growth to hit fastest in a decade in 2017

Eurozone growth to hit fastest in a decade in 2017

Growth in the European Union economy as a whole is expected to be at 2.3% in 2017, slightly higher than in the USA, where growth is expected to reach 2.2%, and Japan, on track to grow at 1.6%.

After climbing to 2.2% this year, euro area GDP growth is forecast to grow by 2.1% in 2018 and 1.9% in 2019. Only the United Kingdom's growth outlook is nearly the same as Italy's, but Britain was excluded from the EU-28 table for the first time in view of Brexit. Employment is projected to increase by 0.7% in 2017.

"The long-lasting moderate expansion has shifted into more robust and long-lasting growth", said Pierre Moscovici, the European commissioner for economic and financial affairs, taxation and customs.

As for Britain, which doesn't use the euro currency, the report said its growth for 2017 had fallen to 1.5 percent and would be even slower in 2018 at 1.3 percent, followed by 1.1 percent in 2019.

"Under this assumption, GDP growth is still expected to remain subdued at 1.1%". The return to the previous pattern of forecasts brings the Commission's forecast schedule back in line with those of other institutions (e.g. the European Central Bank, International Monetary Fund, Organisation for Economic Co-operation and Development). The unemployment rate is projected to fall to 6.4% in 2017 and to gradually reach 5.7% in 2019.The Commission's assessment of the general government budget coincides with the fiscal policy objectives set out in the three-year budgetary projections 2018-2020, namely: a balanced budget in 2017 and 2018 and a surplus in 2019.

The European economy has performed significantly better than expected, mainly due to resilient private consumption, stronger growth around the world, and falling unemployment. "This is substantially higher than expected in spring (1.7%)", the Commission noted.

More news: Google Pixel 2 XL owners are complaining about yet another problem

With a 3.1 percent growth this year, Spain is one of eurozone's most dynamic countries, and it should soon be able to exit the deficit procedure it has been under since 2009.

The EU raised its 2017 Spanish GDP growth forecast to 3.1% from 2.8% while bumping its outlook for next year to 2.5% from 2.4% previously.

Its real GDP is expected to increase at an average pace of around 2.1 percent per year over the 2017-to- 2019 period.

Real GDP in Greece rose by 0.5 pct (q-o-q) in both the first and second quarters of this year (in seasonally-adjusted terms), corresponding to a rise of 0.6 pct (y-o-y) for the first half of 2017.

The highest growth within the eurozone is expected in Malta (5.6%), Ireland (4.8%) and Slovenia (4.7%), while the lowest is projected for Greece and France (1.6%) and Italy (1.5%), similar to the United Kingdom growth rate. Private consumption is projected to remain the main driver of growth. Romania's 2017 budget is built on projections for 6.1% economic growth and deficit equivalent to 2.96% of GDP.

The Commission noted the the prospect of Brexit "is already having an impact on economic activity" and insisted that its forecasts for 2019 where based "on a purely technical assumption of status quo in terms of trading relations between the EU-27 and the United Kingdom".

Like this: