Expansion continues amid uncertainty
Economic expansion in the euro area will to continue over the forecast horizon, but at a slower pace than in 2017. In Q2 and Q3 2018, the economy of the Eurozone is expected to grow at the same rate as in Q1 2018 (+0.4%), before slightly accelerating to +0.5% in Q4 2018.
The main driver behind this expansion in economic activity will be gross fixed capital formation, still driven by favourable financing conditions. Investment is projected to increase in Q2 2018 at the same pace as in Q1 2018 (+0.5%) and to slightly accelerate in the second half of 2018 (+0.6%).
Private consumption expenditures are expected to modestly increase by +0.3% per quarter over the forecast horizon. Inflation is forecast to gain momentum over the forecast horizon, after picking up in Q2 due to energy prices. Risks have increased.
Internal political tensions and spreading protectionist measures at the global level could hamper a prolonged expansion.