EC Lowers Growth Forecast for 2016

The European Commission now expects the eurozone’s economy to expand 1.7% this year, up from 1.6% in 2016 but 0.1 point below its forecast last November.

The commission’s winter report predicts the zone’s gross domestic product will expand 1.9% in 2017 as the region continues a mild recovery amid headwinds from the slowdown in emerging economies.

The EC has lowered its eurozone inflation forecast for 2016 to 0.5% from last autumn’s estimate of 1.0%. Both are well below the 2% rate considered healthy by the European Central Bank. The commission notes that consumer prices in the region fell 0.3% last year, mainly because of the plummeting price of energy.

The EC also has lowered its outlook for global GDP outside the eurozone to 3.6% this year and 3.8% in 2017. The group notes that global economic expansion slowed from 3.7% in 2014 to an expected 3.2% last year, as growth in worldwide trade fell to its slowest pace since 2009.

The global outlook “has again deteriorated, and risks have increased considerably,” according to the report. Its gloomy conclusion: The eurozone's economy will continue to grow, yet its economic outlook remains “highly uncertain” with risks “clearly tilted to the downside.”