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May 12, 2017

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Home » Business » Economy

EU raises eurozone growth forecast

THE European Union yesterday raised its eurozone growth forecast, saying the recovery was gaining strength despite the elevated uncertainties of Brexit and the protectionist policies of US President Donald Trump.

The forecast said the positive outlook came in large part thanks to an improving global economy, with the United States and China helping lift Europe.

But the European Commission warned that the “uncertainty surrounding the economic outlook remains elevated.”

The 19-country eurozone will grow by 1.7 percent in 2017 followed by 1.8 percent in 2018, the commission said in its spring economic forecasts.

That is compared with estimates made in February of 1.6 percent and 1.8 percent, respectively.

“It is good news ... that the high uncertainty that has characterized the past 12 months may be starting to ease. But the euro-area recovery in jobs and investment remains uneven,” Economy Commissioner Pierre Moscovici said.

The protectionist stance on world trade by the Trump administration, Britain’s divorce from the EU, and the fragility of European banks could all negatively impact the future of the economy, the commission said.

All eyes were on France, where pressure is building on incoming President Emmanuel Macron to deliver reforms that will put the brakes on the country’s high public spending.

The commission said the French public deficit this year would land safely on the EU’s limit of 3 percent of annual GDP, on the back of overall growth of 1.4 percent.

But the EU warned the French deficit would bloat after that, putting France at risk of breaking the EU rules again, and in danger of receiving penalties.


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