European Commission cuts its forecast for economic growth in Eurozone in 2019 and 2020

The global economic slowdown has been the talk of the financial markets in the past few months. As per the EU economic forecasts announced today at 10:00 GMT, the slowdown is likely to continue with the global trade complications casting an impact on the Eurozone and keeping the economic growth under pressure. Earlier this morning, the European Union has further cut its forecast for the region’s economic expansion.

European Commission Warns The Global Economic Slowdown Is Likely To Continue

The European Central Bank (ECB) has been active in introducing stimulus that can help counter the economic slowdown. On the other hand, however, the European Commission warned in the EU Forecasts report on Thursday morning, that a significant increase in economic expansion is unlikely in the next couple of years. Forecast for economic growth has been slashed on the basis of a meticulous evaluation that predicts multiple components of global economic slowdown to continue in the upcoming years.

The commission also highlighted in its report that the ongoing trade tensions that have fueled unprecedented uncertainties in trade policies have bruised the world trade that is likely to take some time to recover.

The major uncertainties noted in the European Commission’s report include the U.S – China trade tensions, the need for the United Kingdom and the European Union to define a new set of rules for trading once Brexit is realized, and the changing consumer preferences reported in the car industry. These events, as per the financial experts, have the potential to sustain the high volatility in the financial markets that can be expected to translate into limited economic activity in the years to come.

European Commission’s Forecast For Economic Activity In The Euro Zone

According to the previous European Commission’s forecast (May 2019) for economic growth in the Eurozone, the region comprising of 19 members was expected to print growth of 1.2% in 2019 and was likely to advance to 1.5% growth in the year 2020. In consideration of the macroeconomic scenario, the commission, however, slashed its estimate to 1.1% economic expansion for the Eurozone in 2019 that may improve slightly to 1.2% in the year 2020.

The EUR/USD pair opened at around 1.1120 level on Monday. After briefly topping 1.1150, the pair has mostly traded below the opening level. It continues to remain under pressure and has dropped below 1.11 level. EUR/USD is currently trading around 1.1080 level. The EU economic forecasts have failed to cast a strong effect on the forex market with EUR/USD continuing to trade sideways around 1.1080 level.