Continued economic growth is likely to continue in the eurozone, the European Central Bank (ECB) said in an economic bulletin.
The document is largely consistent with the forecast released after the January meeting of the Board of Governors, Reuters writes.
"A broad and sustainable economic expansion is expected to continue," said the regulator. The ECB's monetary policy measures, which contributed to the process of reducing the share of borrowed funds, continue to support domestic demand.
“Private consumption is supported by employment growth, which has also been facilitated by past reforms in the labor market, and by the well-being of households,” said the ECB. Business investment continues to strengthen amid very favorable financing conditions, increased business profitability and stable demand. ”
Risks for the prospects for economic growth in the eurozone are assessed as balanced.
“On the one hand, the prevailing strong cyclical momentum may lead to further positive growth surprises in the near future,” the economic bulletin notes. “On the other hand, the downside risks are still associated mainly with global factors, including developments in the foreign exchange markets.”
In late January, the euro strengthened against the dollar to a maximum of more than three years after US Treasury Secretary Stephen Mnuchin approved the decline in the dollar as a positive factor for US trade.
A sharp strengthening of the euro could be an obstacle to economic recovery if it restricts exports and puts pressure on prices.
Despite steady growth, the return of inflation to the ECB goal still depends on stimulus measures, said ECB head Mario Draghi at a press conference following a January meeting of the board of governors.
"Based on current data, I see very little chance that interest rates can be raised this year," he told reporters. The ECB has confirmed that it will continue to buy assets worth € 30 billion per month at least until the end of September, and reiterated that rates will remain low "for a long period of time and this will continue after the completion of the asset purchase program."
This week, the European Commission raised forecasts for economic growth and inflation in the eurozone. At the same time, the European Commission warned that volatility in financial markets poses risks to the economy.
According to EC estimates, in 2017, the eurozone economy grew by 2.4%, at the fastest rate in a decade, and exceeded the forecast by 0.2 percentage points. The growth forecast for 2018 has been raised from the expected 2.1% in November to 2.3%. The growth forecast for 2019 has been revised from 1.9% to 2%.
The inflation forecast for 2018 was increased from 1.4% to 1.5%. The forecast for 2019 is maintained at 1.6%. Brussels expects core inflation (excluding volatile energy and food prices) to remain restrained, as labor market weakness declines slowly and wage growth also remains restrained.