IMF downgrades eurozone growth forecasts
By Michele Maatouk
Date: Wednesday 06 Nov 2019
(Sharecast News) - The International Monetary Fund cut its eurozone growth forecasts on Wednesday as it warned that weakness in the manufacturing sector could spread to services.
The IMF now expects the euro area to grow by 1.2% this year, down from an estimate of 1.3% in April. For 2020 and 2021, it expects growth of 1.4%, down from a previous forecast of 1.5% for both years.
The IMF downgraded its growth expectations for Germany to 0.5% for this year from 0.8% in April.
"Economic activity in Europe has slowed on the back of weakness in trade and manufacturing. For most of the region, the slowdown remains externally driven," it said.
"However, some signs of softer domestic demand have started to appear, especially in investment. Services and domestic consumption have been buoyant so far, but their resilience is tightly linked to labour market conditions, which, despite some easing, remain robust."
The IMF said Europe's growth is projected to decline from 2.3% in 2018 to 1.4% this year - the lowest growth rate since 2013. A modest rebound to 1.8% is forecast for 2020 as global trade is expected to pick up.
"Amid high uncertainty, risks remain to the downside, with a no-deal Brexit the key risk in the near term, which could have a sizeable negative impact on the economies in the region," the IMF said.
"An intensification of trade tensions and related uncertainty could also dampen investment. More broadly, the weakness in trade and manufacturing could spread to other sectors - notably services - faster and to a greater extent than currently envisaged. Other risks stem from abrupt declines in risk appetite, financial vulnerabilities, the re-emergence of deflationary pressures in advanced economies, and geopolitics."
Special promo:
Trading the Forex Market? Visit FXmania.com to get advanced infomation about currencies and the Foreign Exchange
Market.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN