The European Commission’s winter forecast for the EU economy, released on February 4, estimated that economic growth in the 28-country bloc will remain unchanged at 1.9 per cent in 2016, while speeding up incrementally in the euro zone, from 1.6 per cent in 2015 to 1.7 per cent this year.
The report said that this was in part due to a longer lasting effect of factors like low oil prices, favourable financing conditions and the euro’s low exchange rate. On the downside, risks to the EU economy were also becoming more pronounced, such as slower growth in China and geopolitical uncertainty.
Valdis Dombrovskis, EC vice-president and the commissioner responsible for the euro, said: “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 neighbourhood. It is important to continue structural reforms that can help our economies grow, withstand shocks in the future, and improve job opportunities for our population.”
Economic and financial affairs commissioner Pierre Moscovici echoed the same sentiment, saying that despite the European economy successfully weathering new challenges, “the weaker global environment poses a risk and means we must be doubly vigilant.”
In Bulgaria’s case, the Commission once again revised its growth forecast for 2015 upward, predicting that it would reach 2.2 per cent, compared to 1.7 per cent in the autumn forecast and one per cent in the spring report. “Bulgaria’s real GDP growth has been revised upwards for 2015 due to a strong rise in net exports over the first three quarters, despite less dynamic industrial production and retail trade,” the report said.
The EC’s estimates for 2016 and 2017 remained unchanged at 1.5 per cent and two per cent, respectively. The slowdown this year is expected because of a drop in public investment due to a projected decrease in the implementation of projects co-financed with EU funds. In 2017, growth is expected to pick up because on an increase in projects funded with EU money and because of the projected increase in domestic demand.
“Overall, risks to the growth outlook appear balanced. On the positive side, further strengthening of exports and stronger employment growth could fuel investment and private consumption more than expected. Some economic sectors could receive stronger-than-projected support from low interest rates and oil prices. Geopolitical uncertainties and stagnation in main trading partners could, however, pose a downside risk to exports and output growth because of the economy’s high degree of openness,” the report said.
(Photo: Alessandro Paiva/sxc.hu)