Downward Revision for Inflation and Economic Growth in the Eurozone From the European Commission
The economy of the Eurozone has been weakening for a long time, with manufacturing and industrial production in deep contraction. Instead of getting better, the situation keeps getting worse and economic forecasts keep getting revised lower.
Earlier we the European Central Bank (ECB) slash its forecasts, now the European Commission is doing the same, underscoring inflation and GDP numbers for this year and the coming two years. Below are the revisions:
- Eurozone inflation: 1.2% in 2019 and 2020. 1.3% in 2021
- Eurozone Economic growth: 1.1% in 2019 (previous 1.2%), 1,2% in 2020 (previous 1.4%)
- German economic Growth: 0.4% in 2019 (previously 0.5%) and 1.0% in 2020 (previously 1.4%)
- European economy has entered protracted period of subdued growth and low inflation
This confirms the deteriorating economic numbers we have seen in Europe recently. The economy keeps weakening and there doesn’t seem to be an and in sight. The ECB cut interest rates in the last meeting and they started another QE programme, but if the economy deteriorates further as the lower revisions suggest, then they will remain dovish for a long time and will be forced to ease the monetary policy further.
This is really bearish for the Euro in the long term, so if you were thinking of buying the Euro, well, don’t. EUR/USD is reversing down now after a really weak retrace higher this morning. The sentiment has turned sort of negative again today in financial markets, so markets seem pretty cautious.
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