The European Commission has left its economic forecast unchanged for this year and 2021, warning that several eurozone member states may see more sluggish growth.
The Winter 2020 Economic Forecast published yesterday projects that gross domestic product (GDP) growth for the 19 eurozone countries will remain stable at 1.2% in 2020 and 2021.
For the EU as a whole, growth is forecast to ease marginally to 1.4% in 2020 and 2021, down from 1.5% in 2019.
The report said “while some downside risks have faded, new ones have emerged. Overall the balance of risks continues to remain tilted to the downside.”
It said the spread of the coronavirus is now the main threat to the growth forecast, with Germany’s economy particularly at risk from the outbreak.
Valdis Dombrovskis, executive vice-president for an Economy that works for People, said: “Despite a challenging environment, the European economy remains on a steady path, with continued job creation and wage growth. But we should be mindful of potential risks on the horizon: a more volatile geopolitical landscape coupled with trade uncertainties.
“So member states should use this weather window to pursue structural reforms to boost growth and productivity. Countries with high public debt should also shore up their defences by pursuing prudent fiscal policies.”
Paolo Gentiloni, European commissioner for the economy, said: “The outlook for Europe’s economy is for stable, albeit subdued growth over the coming two years. This will prolong the longest period of expansion since the launch of the euro in 1999, with corresponding good news on the jobs front. We’ve also seen encouraging developments in terms of reduced trade tensions and the avoidance of a no-deal Brexit. But we still face significant policy uncertainty, which casts a shadow over manufacturing. As for the coronavirus, it is too soon to evaluate the extent of its negative economic impact.”