BRUSSELS—The European Union on Tuesday cut its growth forecasts for this year and next, citing a lack of internal investment and political tensions in Ukraine and the Middle East.
Inflation in the eurozone will also remain below the close-to 2% targeted by the European Central Bank until at least 2016, according to the European Commission, the EU’s executive arm.
The combination of low growth and low inflation create problems for high-debt countries such as Italy and Greece. It also makes it more likely that the ECB could be prodded toward more aggressive stimulus measures, such as large-scale purchases of government bonds and other assets.
Although most analysts don’t believe the ECB will announce new measures after its Thursday meeting, the new forecasts are likely to raise expectations of future action.
The commission said it now expects gross domestic product in the 18-country eurozone to expand 0.8% this year, down from 1.2% it forecast this spring. In 2015, growth will remain low at 1.1%, less than the 1.7% seen in the spring, before picking up to 1.7% in 2016.
The eurozone forecasts were dragged down by lower than-expected growth in the biggest countries, Germany, France and Italy, the latter of which is expected to shrink 0.4% this year.
BRUSSELS—The European Union on Tuesday cut its growth forecasts for this year and next, citing a lack of internal investment and political tensions in Ukraine and the Middle East.
Inflation in the eurozone will also remain below the close-to 2% targeted by the European Central Bank until at least 2016, according to the European Commission, the EU’s executive arm.
The combination of low growth and low inflation create problems for high-debt countries such as Italy and Greece. It also makes it more likely that the ECB could be prodded toward more aggressive stimulus measures, such as large-scale purchases of government bonds and other assets.
Although most analysts don’t believe the ECB will announce new measures after its Thursday meeting, the new forecasts are likely to raise expectations of future action.
The commission said it now expects gross domestic product in the 18-country eurozone to expand 0.8% this year, down from 1.2% it forecast this spring. In 2015, growth will remain low at 1.1%, less than the 1.7% seen in the spring, before picking up to 1.7% in 2016.
The eurozone forecasts were dragged down by lower than-expected growth in the biggest countries, Germany, France and Italy, the latter of which is expected to shrink 0.4% this year.
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