Kuwait- EU forecast: Low oil prices boost European economic growth
(MENAFN- Kuwait News Agency (KUNA)) BRUSSELS Jan 4 (KUNA) -- EU economic growth is forecast to remain stable at 1.9 percent this year and rise to 2.0 percent next year.In the euro area growth is projected to increase to 1.7 percent this year from 1.6 percent last year and to climb to 1.9 percent in 2017 said Pierre Moscovici EU Commissioner for Economic and Financial Affairs presenting the winter economic forecast at a press conference here Thursday."The European economy is successfully weathering new challenges this winter supported by cheap oil the euro rate and low interest rates" Moscovici added."Nonetheless the weaker global environment poses a risk and means we must be doubly vigilant" he warned."Sharp changes of oil price in either direction could be a significant risk. A faster than assumed rebound would weigh on economic activity in Europe. A further sharp fall could impact negatively on financial stability for oil-exporting countries. So here are risks from both sides" he stressed.Moscovici noted that "risks to the economy are becoming more pronounced and new challenges are surfacing: slower growth in China and other emerging market economies weak global trade as well as geopolitical and policy-related uncertainty." The forecast says that driven mainly by abundant supply the oil price has slipped again and is now assumed to remain markedly lower and to rebound later than in the autumn forecast."Overall lower oil prices are expected to be a boon to global economic growth as they initiate a redistribution of wealth from oil exporting economies to oil importing economies such as the euro area" says the forecast."The outlook for the oil price depends on near-term developments in demand (e.g. a more pronounced slowing in emerging market economies) and supply (e.g. the addition of substantial oil exports from Iran after the recent removal of sanctions)" it says.The forecast pointed out that annual inflation in the euro area was only slightly above zero towards the end of 2015 mainly due to a further drop in oil prices. For 2016 as a whole euro area annual inflation is now forecast at only 0.5 percent.Inflation is expected to pick up gradually and to reach 1.5 percent in 2017 as higher wages higher domestic demand and a moderate pick-up in oil prices increase price pressures. It says that "growth prospects have deteriorated sharply for Russia and Brazil as well as for countries in the Middle East Northern Africa and Sub-Saharan Africa." The migration crisis poses "major political challenges" which could hamper growth if not properly handled it says."A more widespread suspension of Schengen and measures that endanger the achievements of the internal market could potentially have a disruptive impact on economic growth" it said.(end) nk.mb
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