Eurozone Economic Outlook: Q3 2018

Economic Outlook Remains Positive Despite Lower Recent Growth

The Eurozone economy has slowed down more than expected, with year-on-year growth of 2.3% in the first half of 2018. Net exports made a negative contribution to growth and the global trade picture has worsened, but consumption and investment continue to support growth. 

Private sector confidence remains high, labour markets are still improving, and borrowing costs are extremely low. 

The overall positive economic outlook has led the European Central Bank (ECB) to announce an end to its quantitative easing programme after December 2018, though it has also committed to maintaining its policy rates at their current low level until the autumn of 2019.

Eurozone GDP is expected to grow by 1.9-2.3% in 2018 and by 1.5-2.1% in 2019. Slow labour-productivity growth and an ageing workforce are likely to reduce GDP growth towards 0.9-1.9% in 2021-2025. Baseline forecast probability: 20-30% at a 1-year horizon.