The Spanish deficit could fall to 3.1 percent of GDP this year, down from 4.5 percent in 2016, and the Commission expects it will continue to shrink to 2.4 percent in 2018 and 1.7 percent in 2019. Only the United Kingdom's growth outlook is nearly the same as Italy's, but Britain was excluded from the EU-28 table for the first time in view of Brexit.
Wage growth grew moderately for the first half of 2017, even though the unemployment rate was very low, and skill shortages increased.
"The long-lasting moderate expansion has shifted into more robust and long-lasting growth", said Pierre Moscovici, the European commissioner for economic and financial affairs, taxation and customs.
The current account gap is forecast to continue widening from 2.4%/GDP in 2016 to 3.1% in 2017 and 3.2% in 2018, due to strong domestic demand and import growth, which is projected to continue outpacing the growth of exports, in line with strong private consumption. The bloc also cut its United Kingdom 2017 economic growth forecast to 1.5% from 1.8% while keeping it steady at 1.3% for next year. "More generally, uncertainty regarding the government's policies could also hamper growth", the Commission said. 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.
The optimism, the commission said, is fueled by increased private consumption, favorable lending conditions, improved economic growth around the world and falling unemployment in Europe. It is however expected to grow to 1.8% in 2019, with higher prices in the services projected to be behind this. Average annual inflation is projected to accelerate to 1.5% in 2018 and 1.6% in 2019.The positive developments in the labour market are expected to remain.More news: AIG Hamid Shakeel among 3 martyred in Quetta blast
The EU raised its 2017 Spanish GDP growth forecast to 3.1% from 2.8% while bumping its outlook for next year to 2.5% from 2.4% previously.
Regarding inflation, the Commission expects that robust domestic demand, additional wage hikes in a tight labour market and additional fiscal stimulus will gradually drive inflation rate upwards and make it re-enter the Romanian central bank's target band of 2.5%±1 pp. By the end of 2017, growth will likely be around 1.4%-1.5%.
After the near collapse of the Monte dei Paschi di Siena bank threatened Italy's economy, the report also noted that "recent government actions to address acute risks in weaker banks could help unclog bank lending and further reduce downside risks, while structural reforms are expected to lift potential growth".
The EC stressed that its United Kingdom projections for 2019 were based on a "purely technical assumption of status quo in terms of trading relations" between the United Kingdom and 27 remaining European Union countries.