We expect Bulgaria's economic growth to recover, albeit limited by declining demand for its foreign markets, shortage of employees and cooling of consumer attitudes, the European Commission said. With energy price inflation expected to moderate further in the coming quarters and little sign that higher wage growth has been fueling underlying price pressures, euro area inflation is forecast to reach 1.4 percent in both 2019 and 2020. More Europeans are now in work than ever and employment growth is expected to continue, albeit at a slower pace, it added. But it will rebound to 1.5 percent in 2020. Italy is expected to see the worst performance on GDP, with just 0.1% growth, followed by Germany (0.5%), Belgium (1.2%) and Britain and France (1.3%).
The Commission predicts that economic growth will continue to slow down to 2.5% in 2020. The euro area's aggregate debt-to-GDP ratio should fall from 87.1 percent in 2018, to 85.8 percent in 2019 and 84.3 percent in 2020. Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, told a press comference presenting the forecast that "the European economy will continue to grow in 2019 and 2020".
Romania's economy expanded by 4.1% year-on-year in 2018, compared to a growth rate of 7% in 2017, provisional data from the country's statistical board showed in April.
Germany, the largest economy in Europe, saw its projected growth slashed from 1.1pc to 0.5pc for this year. Debt-to-GDP ratios are forecast to fall in most member states in 2019 and 2020 as deficits remain low and nominal GDP growth should remain higher than the average interest rate on outstanding debt.
As a result of the slowdown this year, the aggregated budget deficit of the euro zone will rise to 0.9% of GDP from 0.5% last year, and stay at 0.9% in 2020.
"Yet risks to the outlook remain pronounced". On the external side, these include a further escalation of trade conflicts and weakness in emerging markets, particularly in China.
Europe should also "stay alert to a possible no-deal Brexit", he added, with negotiations on the EU's divorce with the United Kingdom stalled and no agreement in sight.