- Title: Euro zone growth to slow in 2017, inflation to pick up, Commission says
- Date: 9th November 2016
- Summary: BRUSSELS, BELGIUM (FILE) (REUTERS) EXTERIOR OF EU COMMISSION BUILDING EU FLAGS REFLECTING ON EU SIGN
- Embargoed: 24th November 2016 13:15
- Keywords: EU Eurozone Growth Inflation Forecast European Commission Moscovici Italy Greece
- Location: BRUSSELS, BELGIUM
- City: BRUSSELS, BELGIUM
- Country: Belgium
- Reuters ID: LVA00157Q5VEV
- Aspect Ratio: 16:9
- Story Text: EU Economic Affairs Commissioner Pierre Moscovici said on Wednesday (November 9) that the eurozone growth will slow next year because its main driver, domestic demand, will decrease as a result of a likely rise in energy prices, while inflation is likely to pick up.
In a regular economic forecast for the 28 countries that make up the European Union, the EU's executive arm said growth in the 19 countries sharing the euro would slow to 1.7 percent this year from 2.0 percent in 2015 and decelerate further to 1.5 percent in 2017 before picking up again to 1.7 percent in 2018.
Moscovici said the slow down was due to a number of economic factors and global uncertainty.
"This still moderate growth rate is the consequence of a number of obstacles in the way of a growth we wish was faster: weakness in global trade, downturning of factors that would favour faster growth, such as low oil prices or currency depreciation and also the high level of uncertainty in Europe and also beyond," he said.
Moscovici said the Commission's forecast for Britain had to be recalculated to take into account the impact of the Brexit vote.
"Growth is projected to decline, to be almost divided by two to one percent in 2017. This reflects what we estimate could be the impact of Brexit vote on the outlook as business reacts to the current uncertainty by delaying or cancelling sometimes investment," he said.
Inflation, which European Central Bank wants to keep below, but close to two percent over the medium term, is to pick up to 0.3 percent this year from zero last year and to 1.4 percent in 2017 and in 2018, the Commission forecasts said.
"This reflects the defusing of the oil price effects, as it is picking up again, the gradual increase of underlying inflation, which is due to an increase in wage level and a slackening in production. To put it simply, this is a welcomed sign of a return to a certain degree of normality," Moscovici said.
The French Commissioner declined to elaborate on the conclusion of an ongoing review of the EU member states' budgetary plans for 2017, saying it would be subject to another news conference on November 16.
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