European Union Economic Update for 2019
The European Union is a solo market with twenty eight countries that operate under it. The European Union is without doubt one of the world’s major trading power. At present, the EU economy is growing at a much moderate rate and it isn’t likely to accelerate any soon. Some of the preliminary estimates indicate that EU’s growth was almost half in the 2nd quarter, resuming the same old slow speed that investors had witnessed in the second half of the year 2018. The industrial sector has been recording a weak performance consistently, following which the confidence is much low amidst worsening global scenarios, all of which have together contributed to the slow growth.
According numerous latest reports, economic sentiment dropped to an almost 3-year low in the month of July as well as the composite PMI index also fell. Even though the service sector registered a brisk growth, manufacturing activities remained weak. Clearly, EU’s economic environment is bleak, especially in the wake of the on-going trade wars as well as Brexit and the political problems in Italy. Given the current scenario, England’s Central Bank may likely announce a stimulus package during its meeting to be held in the month of September to give a positive push to the existing economic outlook. The current geopolitical conditions have hampered both exports and investments. According to the European Commission, the EU may expand by almost 1.4% as well as the euro zone by almost 1.2%.
Within EU, Italy is likely to witness the worst rate of growth. It is expected that Italy’s growth next year will accelerate to around 0.7percent, but that will still be the slowest. In the 2nd quarter of the year 2019, the European Union’s economy expanded by 1.4% on a YoY basis, dropping from a 1.6% gain recorded previously. This was EU’s weakest rate of growth since 2013’s 3rd quarter. At present, the EU economy is showing some resilience as far as domestic demand is concerned. However, export related activities are subdued. In the weeks to come, Euro area’s economic activity will largely depend on the service sector and labour market’s resilience in view of the weak manufacturing sector.
Although, Euro area’s economic growth had surpassed expectations during the 1st quarter of 2019, which was largely due to the domestic demand. But, the strong performance of the economy was affected by numerous temporary factors like UK’s stockpiling ahead of Brexit’s original date, mild winter season as well as the rebound that was witnessed in the sale of cars.