EU upgrades economic forecast for Croatia

European Commission Vice President Valdis Dombrovskis holds a news conference at the EU Commission headquarters in Brussels Belgium

EU upgrades economic forecast for Croatia

Although investment growth is set to moderate this year compared to the very high level of 2018, favourable financing conditions, high levels of capacity utilisation and a more intensive use of European Union funding suggest that it may remain an important growth driver, the Commission said.

However, a significant acceleration in growth is expected by the European Commission for Germany, as the country's growth is expected to increase to 1.4% in 2020, falling just below the expected eurozone average of 2020 of 1.6%.

Valdis Dombrovskis, vice president for the euro and social dialogue, who is also in charge of financial stability, said: "The resilience of our economies is being tested by persisting manufacturing weakness stemming from trade tensions and policy uncertainty". Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, told a news conference "the European economy continues to expand against a hard global backdrop".

The commission said consumer prices in Luxembourg rose 2% in 2018 and forecast the rate would be 1.7% this year and 1.6% in 2020.

"Private consumption growth, the main driver of domestic demand, should continue to benefit from strong labour market conditions".

According to the Commission, Lithuania will post the fastest economic growth in the Baltics this year - 3.1 percent, while in 2020 Lithuania's GDP will increase 2.4 percent. "On the domestic side, a "no deal" Brexit remains a major source of risk", he said. All EU countries are set to grow again in both 2019 and 2020, with the strong labour market supporting demand.

It warned that the "extended economic confrontation between the U.S. and China, together with elevated uncertainty around United States trade policy could prolong the current downturn in global trade and manufacturing and affect other regions and sectors". It also revised down its estimate for next year's growth, which is now seen at 1.4 per cent instead of the 1.5 per cent forecast in May.

The projections for Bulgaria's economic growth in 2019 and 2020 remain unchanged - 3.3% and 3.4% respectively. For all other incoming data, this forecast takes into consideration information up until 2 July. Growth is expected to return to 1.4% next year, less than the 1.5% the commission predicted earlier.

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