The inflow of European Union funds and continued strong domestic consumption will fuel a continuing strong economic growth in Central and Eastern Europe, the ECB report says. Inflation will also probably remain contained by falling energy prices, despite a tighter labor market situation.
Growth in the Eurozone will remain, but might slow somewhat. Unemployment in Western Europe is also likely to fall further, albeit at a slower rate.
The global economy, however, will experience a slowdown this year, due to the rising cost of borrowing and the ongoing U.S.-Chinese trade war.
“Looking ahead, global economic activity is expected to decelerate in 2019 and remain steady thereafter,” the ECB report said. “Global inflationary pressures are expected to rise slowly as spare capacity diminishes.”
Besides the trade war, the partial U.S. government shutdown is also likely to have a negative impact on the economy there, with about 30 million small and medium sized businesses likely to feel the effects of the stalemate in Washington.
