EC lowers economic growth expectations due to Chinese slowdown and migration threat

Newsroom 05/02/2016 | 16:40

Growth in the European Union will be slightly weaker than previous forecast had said, according to the European Commission’s winter 2016 economic forecast, published on Thursday. The economic slowdown experienced by China and other emerging markets, as well as the refugee and migration crisis, “could further hurt the economy”, added MarketWatch.

As far as Romania is concerned, the expected economic growth for 2016 stands at 4.2 percent on higher consumption driven by wage increases and fiscal relaxation, set to peak this year before moderating in 2017, according to the EC country report.

The current 1.9 percent EU growth rate published by the EC is in line with 2015 levels but down slightly from the November forecasts. “The recovery is slow, both in historical perspective and compared to other advanced economies,” said the commission, highlighting how the EU is still struggling to recover from the 2008 financial crisis “despite conditions such as falling oil prices, lower government funding costs and the relatively low value of the euro that usually help economic growth”, added MarketWatch.

One remaining concern is that of low inflation since “with the assumed path of energy prices, inflation should remain very low in the first half of this year,” according to European Economics Commissioner Pierre Moscovici, cited by Bloomberg. This might spur the ECB into action, with ECB president Mario Draghi having said that “policy makers will review their stimulus in March as the oil price collapse threatens price stability,” adds Bloomberg.

Other risks to the economy come in the form of “policy reactions to migration and security threats, which could put further pressure on the Schengen system as well as uncertainty surrounding further implementation of much-needed reforms,” further commented Marco Buti, the commission’s director general for economic and financial affairs, as cited by Bloomberg.

Andreea Tint

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