Autumn 2017 Economic Forecast: continued growth in a changing policy context

Publikováno: 9. 11. 2017

The euro area economy is on track to grow at its fastest pace in a decade this year, with real GDP growth forecast at 2.2%. This is substantially higher than expected in spring (1.7%).
 The EU economy as a whole is also set to beat expectations with robust growth of 2.3% this year (up from 1.9% in spring). According to its Autumn Forecast released today, the European Commission expects growth to continue in both the euro area and in the EU at 2.1% in 2018 and at 1.9% in 2019 (Spring Forecast: 2018: 1.8% in the euro area, 1.9% in the EU).

Growth has surpassed expectations but is forecast to ease somewhat

Growth has surpassed expectations but is forecast to ease somewhat
The European economy has performed significantly better than expected this year, propelled by resilient private consumption, stronger growth around the world, and falling unemployment.
Investment is also picking up amid favourable financing conditions and considerably brightened economic sentiment as uncertainty has faded. The economies of all Member States are expanding and their labour markets improving, but wages are rising only slowly.

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A changing policy context

Although the cyclical recovery has now been underway for 18 uninterrupted quarters, it remains incomplete, with for instance still significant slack in the labour market and untypically low wage growth. GDP growth and inflation are therefore still dependent on policy support. The European Central Bank has kept its monetary policy very accommodative while some other central banks around the
world have started raising interest rates. A number of euro area Member States are expected to adopt expansionary fiscal policies in 2018 but the overall fiscal stance of the euro area is expected to stay
broadly neutral.

Unemployment continues to fall but slack remains

Job creation has been sustained and labour market conditions are set to benefit from the domesticdemand driven expansion, moderate wage growth, and structural reforms implemented in some Member States. Unemployment in the euro area is expected to average 9.1% this year, its lowest level since 2009, as the total number of people employed climbs to a record high. Over the next two years, unemployment is set to decrease further to 8.5% in 2018 and 7.9% in 2019. In the EU, the
unemployment rate is projected at 7.8% this year, 7.3% in 2018 and 7.0% in 2019. Job creation is expected to moderate, as temporary fiscal incentives fade in some countries and skill shortages emerge in others.

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Zdroj: EK

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