zone GDP to grow moderately in 2016, 2017: Commission
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[February 04, 2016]
By Francesco Guarascio
BRUSSELS (Reuters) - Euro zone economic
growth will slightly accelerate this year and next, the European
Commission estimated on Thursday, but the pace will be slower in 2016
than previously forecast because of increased global risks.
The gross domestic product (GDP) of the 19-country single currency
bloc is expected to expand by 1.7 percent this year from 1.6 percent
in 2015. The recovery will gain speed in 2017 with economic
expansion of 1.9 percent, the EU executive said in its winter
The growth estimate for this year is a slight downward revision of
the 1.8 percent seen in the last set of forecasts in November. The
2017 figure was unchanged.
External factors are seen as the main risks to the euro zone economy
that will continue to grow mostly because of domestic consumption.
"Europe's moderate growth is facing increasing headwinds, from
slower growth in emerging markets such as China, to weak global
trade and geopolitical tensions in Europe's neighborhood,"
Commission Vice President Valdis Dombrovskis said in a statement.
Low oil prices, cheap credit and the weak euro will continue to
boost euro zone growth, but will be offset by a "disorderly
adjustment" in China and the possibility of higher interest rates in
the United States.
All national economies of the euro zone are expected to grow this
year, with the exception of Greece where GDP will drop by 0.7
percent, albeit a lesser decline that the 1.3 percent decrease
forecast by the Commission in November.
The Greek economy will return to growth in 2017 with an expected 2.7
percent expansion. "These are the good signs that some stabilization
is already happening," EU's Economics Commissioner Pierre Moscovici
told a news conference, warning however against complacency in the
Germany's economy, the euro zone's largest, will grow 1.8 percent
this year and next, compared with November forecasts of 1.9 percent.
It also will continue recording large current account surpluses,
exceeding the 6 percent limit recommended by the EU institutions.
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Growth forecasts in 2016 for France and Italy - the second- and
third-largest economies of the euro zone - were also revised
slightly downward to respectively 1.3 and 1.4 percent.
Ireland is set to post the highest growth among all 28 EU countries,
with an estimated expansion of the economy of 4.5 percent in 2016.
The forecast marks a slowdown from the 6.9 percent growth estimated
in 2015, but was welcomed by the Commission as it averts fear of
possible bubbles, Moscovici said.
INFLATION TO REMAIN LOW
Cheap oil will continue suppressing consumer prices, with euro zone
inflation seen at only 0.5 percent this year, the Commission said.
In its last forecast released in December, the European Central Bank
had put inflation at 1 percent in 2016, but has later said its
estimates were to set to be cut.
The Commission sees consumer prices growing by 1.5 percent in 2017,
slightly below the ECB forecast of 1.6 percent, and still off the
ECB's target of just under 2 percent.
Unemployment rates in euro zone countries will continue to fall but
at a slower rate and the bloc's average will stay just above 10
percent during the forecast horizon.
(Reporting by Francesco Guarascio; editing by Philip Blenkinsop)
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