Europe growth outlook remains robust amid downside risks

Europe growth outlook remains robust amid downside risks

UNITED NATIONS, (Xinhua) — The growth outlook for Europe remains robust with the euro area projected to expand 2.1 percent this year and 1.9 percent in 2019, a newly updated UN report said, while cautioning high downside risks.

Dynamic labour market conditions and rising disposable incomes are behind Europe’s strong private consumption growth, said the UN World Economic Situation and Prospects (WESP) 2018 updated as of mid-2018.

Business investment and construction activity will also be supported by the loose monetary policy stance of the European Central Bank, it said.

However, downside risks to the region’s outlook have increased, WESP 2018 cautioned.

For one, it noted amid rising trade tensions among major economies, various product groups have become the subject of new or changed tariff regimes. “A widening of trade restrictions would pose a significant risk, especially to the export-reliant European economies.”

For another, the report pointed out that as Britain prepares to leave the EU, the transition phrase will entail significant uncertainty, particularly over future trade relations between the two parties.

WESP 2018 projects growth in the EU members from Eastern Europe and the Baltics to remain above the EU average, driven by robust export performance and infrastructure spending, which has been boosted by a surge in inflows of EU funds.

However, rising debt burdens and the potential buildup of housing bubbles pose medium-term challenges in these countries, it warned.

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