Europe’s Growth Tackles 2020 with Caution

The European Commission has revised down its estimates for the euro area, to 1.2% in 2019 and 1.4% in 2020.

It is in this state of mind that the European Commission presented, Wednesday, July 10, its summer economic forecasts, in which it reviews downward growth estimates in the euro area for 2020. A corrigendum that explains, according to her, the “weakness” of the manufacturing sector.

Growth should continue to be at the rendezvous. It forecasts an overall increase of 1.2% in 2019 and 1.4% in 2020 of the gross domestic product (GDP) of the 19 countries of the euro area. For the European Union (EU) as a whole, it anticipates increases of 1.4% and 1.6% respectively.

That is 0.1 percentage point less than it had announced in its latest forecast in May (it was forecasting 1.5% in 2020 in the euro area). At issue: trade tensions and significant political uncertainties, which continued to weigh on the confidence of the manufacturing sector.

A more difficult context that particularly affects the first European economy, Germany. The European Commission maintains its expectations for 2019, but recounts down those of 2020, respectively at 0.5% and 1.4%. On 5 July, the German statistical office (Destatis) had, in fact, recorded a drop of 8.6% compared to 2018 industrial orders of the country, the largest decline in ten years, date of the last recorded recession in Germany.

The forecasts for France are undergoing almost the same fate (1.3% growth in 2019 and 1.4% in 2020). The Commission notes that the business climate and consumer confidence are doing well in France, but expects weak external demand to weigh on economic activity.

Italy’s forecasts, which have just escaped a possible excessive deficit procedure for its 2019 budget, remain unchanged: the Peninsula should barely reach a growth of 0.1% in 2019 and 0, 7% in 2020. However, the draft transalpine 2020 budget, to be sent to Brussels no later than 15 October, will receive particular attention.

These statistics, however, contrast with those of the countries of Central and Eastern Europe, since the Commission expects a growth rate of 3.7% in Romania, 3.2% in Hungary and 2.7% in Poland. in 2020.