Business World

Tuesday 18 September 2018

Euro-area growth tipped to slow down this year

The euro slipped after the report and traded at $1.1589 at 12.22pm Frankfurt time. Stock image
The euro slipped after the report and traded at $1.1589 at 12.22pm Frankfurt time. Stock image

Jana Randow and Alessandro Speciale

The European Central Bank (ECB) is set to tweak its forecasts lower for euro-area economic growth as global trade tensions damp external demand, according to officials familiar with the latest projections.

The predictions for output have been cut slightly starting this year, the people said, asking not to be named because the assessment is still confidential. The UK and Turkey are among nations dragging on demand, although the US outlook is still positive, the officials said.

The darker outlook comes at an awkward time for the Governing Council as it prepares to wind back stimulus, although the adjustments probably aren't big enough to derail those plans yet. The path of inflation, the primary consideration for monetary policy, is largely unchanged, the officials said.

The euro slipped after the report and traded at $1.1589 at 12.22pm Frankfurt time.

The ECB committee that oversees the compilation of the forecasts now sees the risks to economic growth as tilted to the downside, according to the people.

While that's a change from policymakers' latest view that the risks are "broadly balanced", the Governing Council could choose to disagree with that assessment and keep its existing language at its meeting today.

An ECB spokesman declined to comment.

ECB President Mario Draghi will unveil the final projections after the Governing Council meets later today.

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