Autumn 2019 Economic Forecast
“So far, the European economy has shown resilience amid a less supportive external environment: economic growth has continued, job creation has been robust, and domestic demand strong. However, we could be facing troubled waters ahead: a period of high uncertainty related to trade conflicts, rising geopolitical tensions, persistent weakness in the manufacturing sector and Brexit”. Commission Vice-President for the Euro, Valdis Dombrovskis, voiced these concerns as he commented on the economic forecast. On the one hand, “I urge all EU countries with high levels of public debt to pursue prudent fiscal policies and put their debt levels on a downward path. On the other hand, those Member States that have fiscal space should use it now”. In other words, prudence is recommended for countries like Italy, while countries that can afford to invest should do so. “A number of risks could lead to lower growth than forecast. A further increase in uncertainty or a rise in trade and geopolitical tensions – the Commission’s forecast reads – could dampen growth, as would a sharper-than-expected slowdown in China due to weaker effects from policy measures enacted so far”. Closer to home, “risks include a disorderly Brexit and the possibility that weakness in the manufacturing sector could have a bigger spillover effect on domestically-oriented sectors”.
