MW: EU cuts growth forecast on China, migration threat
BRUSSELS--Growth in the eurozone and the wider European Union will be slightly weaker this year than previously forecast, the European Commission said Thursday, warning that the economic slowdown in China and other emerging markets, as well as failure to deal the refugee and migration crisis, could further hurt the economy.
The economy of the 19-country eurozone is expected to grow 1.7% this year. While that is a slight improvement from the 1.6% growth in 2015, it is somewhat lower than the 1.8% expansion the commission had forecast in November. In 2017, the eurozone economy will now likely expand 1.9%, the commission said, in line with earlier predictions.
Growth in the 28-country EU is expected stay at 1.9% this year, in line with in 2015, but down slightly from the commission's November forecast. The commission sees the EU economic output expanding 2% next year, also slightly below the 2.1% forecast earlier.
The new forecasts highlight how the EU continues to struggle in its recovery from the 2008 financial crisis and the debt crisis that followed--despite conditions such as falling oil prices, lower government funding costs and the relatively low value of the euro that usually help economic growth.
"The recovery is slow, both in historical perspective and compared to other advanced economies," the commission said.
One factor that continues to weigh on sentiment, especially in the eurozone, is persistently low inflation--despite efforts by the European Central Bank to push up consumer prices through a big asset-purchase program.
The commission now expects inflation in the eurozone to be just 0.5% this year, down from the 1% previously forecast. In 2017, inflation in the currency union is now seen at 1.5%, down from the 1.6% predicted earlier and still below the close-to-2% targeted by the ECB.
In the EU, consumer prices are expected to grow 1.5% this year and 1.6% next year.
Write to Gabriele Steinhauser at gabriele.steinhauser@wsj.com