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Interim forecast, February 2008 - The current headwinds start to take their toll in the EU

The global economy is cooling and the financial turmoil still ongoing. So far, the European economy has weathered these headwinds relatively well, but can no longer escape unaffected. Growth is revised down by 0.4 pp. in 2008 and the high inflation is fading only gradually.

Article created 21 February 2008

Economic growth is expected to slow to 2.0% this year in the gdp growth and risks to current outlookEuropean Union (1.8% in the euro area) as some of the downside risks identified in the autumn forecasting exercise – the ongoing financial turmoil, a sharp slowdown in the US, and high commodity prices – have materialised. This is 0.4 percentage point less, for both areas, than forecast in November.   Inflation this year is expected to average 2.9% in the EU and 2.6% in the euro area following the strong rise in food and energy prices. This is ½ percentage point more than compared to the previous forecast. But inflation is expected to return to more normal levels in the last quarter of 2008.

The risks to the growth outlook stay on the downside. The US downturn is more marked and the impact of the fiscal and monetary easing remains uncertain. The distress in the financial markets is still ongoing. Lastly, high commodity prices are taking their toll on both European growth and inflation

>> Interim forecasts of 21 February 2008 pdf (296 kB) 
>> Press release - 21/02/2008

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