The European Commission (EC) increased the forecast of this year’s GDP growth by 0.7 percentage point to 4.2 percent. For 2018, the forecast was increased by 0.6 percentage points to 3.8 percent. For 2019, the EC predicts 3.4 percent GDP growth.
“Real GDP growth is expected at 4.2 percent in 2017 and 3.8 percent in 2018, before decelerating to 3.4 percent in 2018, with a growing positive demand gap, driven by domestic demand. Private consumption will support favorable labor market trends and record high consumer confidence. It is expected that there will be some weakening of consumption at the end of the forecast period when higher inflation will reduce real household disposable income and slow down employment growth,” the EC said in its report.
The Commission expects a gradual rebound of investment from the second half of the year. “Strong public investment growth is expected at the end of 2017 and beginning of 2018 due to the higher use of EU Structural Funds. The private investment recovery will be more gradual, supported by strong domestic and external demand, high capacity utilization and easy access to finance,” it said.