Malta economy forecast to grow 5.6 pct in 2017

The report suggests a deal could be completed by November 2018

The report suggests a deal could be completed by November 2018

The EU economy as a whole is also forecast to beat expectations and reach robust growth rates of 2.3 pct this year (up from growth forecasts of 1.9 pct in the spring).

As a result, GDP growth in France is expected to reach 1.6 percent in 2017, 1.7 percent in 2018, and to slightly decelerate to 1.6 percent in 2019.

"After five years of moderate recovery, European growth has now accelerated", EU Economy Commissioner Pierre Moscovici said.

The commission's figures suggest that by 2019, United Kingdom economic growth will have slowed to just 1.1%, slower than Italy, Spain and Greece.

The general government headline deficit is projected to further deteriorate to 3.5% of GDP in 2017 from 3.0% in 2016, due to numerous fiscal easing measures.

The main factor behind this year's growth is set to be external demand, with domestic demand coming in second because of a significant contraction in investment. The labour market is recovering fast and unemployment is expected to drop further, although average wages may increase only gradually. GDP growth and inflation are therefore still dependent on policy support. Positive forces could emerge, however, from diminishing uncertainty and improving sentiment in Europe to stronger global growth.

Relatively moderate increases in regulated fuel prices have contained overall HICP (The Harmonised Index of Consumer Prices) inflation, which is forecast to average 1.3% in 2017, marginally below the euro-area average. Romania's annual inflation rate was -0.5% at the end of 2016.

But for the first time, risks surrounding the economic outlook are "broadly balanced" instead of "tilted to the down side".

"Buoyant revenue growth underpinned by strong underlying economic growth will be outpaced by growth in government expenditure, especially still-high spending for infrastructure investment", it said.

The Commission noted the the prospect of Brexit "is already having an impact on economic activity" and insisted that its forecasts for 2019 where based "on a purely technical assumption of status quo in terms of trading relations between the EU-27 and the United Kingdom".

"This is for forecasting purposes only and has no bearing on the talks underway in the context of the Article 50 process".

This forecast is based on a set of technical assumptions concerning exchange rates, interest rates and commodity prices with a cut-off date of 23 Oct 2017. Unless policies are credibly announced and specified in adequate detail, the projections assume no policy changes.

The commission said dark clouds that did exist included the outcome of Brexit talks beween European Union and Britain as well as geopolitical tensions between the United States and North Korea. The Commission's autumn forecasts published today in Brussels are similar to those released earlier by the Croatian government, reports Jutarnji List on November 9, 2017.

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