EU trims economic growth forecasts amid trade tensions


European Commissioner for Economic and Financial Affairs Pierre Moscovici, left, speaks with European Commissioner for Migration and Home Affairs Dimitris Avramopoulos during the weekly college meeting at EU headquarters in Brussels, Wednesday, July 3, 2019. (AP Photo/Virginia Mayo)

May 04 2021 05:30 pm
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BRUSSELS (AP) — The European Union said Wednesday it has trimmed its forecasts for economic growth next year as global trade tensions weigh on the bloc’s export-focused manufacturers.

The EU executive commission reduced its forecast for next year for both the 19-country eurozone and the 27 countries that are due to remain in the bloc after Britain leaves, which is scheduled to happen at the end of October.

Eurozone growth is expected to pick up from 1.2% this year to just 1.4% in 2020, down from a previous estimate of 1.5%. Growth in the EU – without Britain – is forecast to rise from 1.4% to 1.6% next year, down from the 1.7% estimated previously.

The European commissioner in charge of economic affairs, Pierre Moscovici, said there were risks to the region and highlighted “growing trade tensions.”

“A couple of sectors have been hit hard: external trade and manufacturing,” he said while presenting the EU’s interim forecast.

He said that growth was being supported by a strengthened labor market, but there is still a risk that the economy might do worse than forecast due to “any further escalation of trade tensions.”

The U.S. government has imposed tariffs on several countries, including EU states but particularly China. The battle between the U.S. and China has weighed on business sentiment around the world and also has knock-on effects on European businesses, which produce and sell in each of those markets.

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