The European Commission increased the forecast of this year’s GDP growth by 0.4 percentage points to 4.2 percent this year. For 2018, the forecast was increased by 0.6 percentage points to 3.8 percent. For 2019, the EC predicts a 3.6 percent GDP growth, up by 0.2 percentage points compared to the last forecast.
“The growth composition is expected to remain similar to 2017, with domestic demand providing the strongest contribution. Private consumption is projected to be supported by faster wage growth and record-high consumer confidence. Investment is expected to continue a gradual recovery, driven by a strong rebound of public investment, especially in 2018,” the EC said in its report.
The Commission also expects a strong inflation growth. “Having averaged 1.6 percent in 2017, inflation is projected to rise to 2.1 percent in 2018 and 2.6 percent in 2019. Core inflation, in particular services prices, is set to gradually rise between 2018 and 2019 to over 2.5 percent in the second half of 2019. A tight labor market and intensifying wage pressures are expected to be key drivers for core inflation, whereas headline inflation will continue to be strongly affected by assumed fluctuations in prices for energy and unprocessed food,” the report explained.
Throughout the EU, GDP is expected to grow by 2.3 percent this year and by 2 percent in 2019 on average.