Economic institutes expect only low economic growth in the euro area

Economic growth in the euro area will be weak this year. After 0.2% in the first quarter of 2019, it will only reach 0.3% in the following quarters. This is stated by the three institutes Ifo from Munich, KOF from Zurich and the Istat from Rome.

Industrial production will stagnate in the first quarter of 2019 and then grow by 0.2% twice. Nevertheless, the labor market is developing strongly: the number of employees rose by 0.3% in the fourth quarter of 2018, and the unemployment rate fell to 7.8%, the lowest rate since the end of 2008. At the same time, wages rose significantly.

Both developments could support household demand in the near future: According to the Ifo’s forecast, it should grow by 0.3% in the first quarter of 2019 and by 0.4% in the coming quarters.

Risks for the forecast are an expansion of trade conflicts, a hard Brexit and a general slowdown in the global economy.

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