European Union summer forecast leaves Bulgaria 2019 growth estimate unchanged at 3.3%


Euro zone government bond yields edged down on Thursday after Federal Reserve chief Jerome Powell set the stage for a USA rate cut this month, bolstering expectations that monetary easing in the currency bloc will not be far behind.

"All this confirms the need for central banks to consider and analyze developments in a broad set of inflation expectations indicators", said Mr Coeure, who was a driving force behind quantitative easing when it was introduced.

The European Commission lowered its estimates on Wednesday for euro zone growth and inflation, saying uncertainty over USA trade policy posed a major risk to the bloc.

The report noted the Bulgarian economy's stronger growth in the first quarter, at 3.5 per cent year-on-year compared to 3.1 per cent in 2018, but said that due to the weakening external environment, the country's economy was expected to expand at a slower pace in the second half of the year.

The year-on-year rate of German harmonised CPI was revised higher to show an advance of 1.5%, instead of the 1.3% gain that had been initially calculated.

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said:"The European economy continues to expand against a hard global backdrop".

Malta's economy is projected to grow the fastest in the European Union (EU), according to the latest economic forecast released by the European Commission on Wednesday. A Fed cut could push the euro higher against the dollar, further damping euro-zone inflation and giving the Governing Council reason to step up its own stimulus.

Further south, in France, INSEE confirmed that harmonised CPI rose at a 1.2% year-on-year clip, versus 0.9% in May. Growth in the euro area was stronger than expected in the first quarter of the year due to a number of temporary factors such as mild winter conditions and a rebound in auto sales.

Policymakers deemed annual price growth of 1.6 percent now forecast for 2021 to be "some distance away" from that goal and said there was "no room for complacency" in the face of plummeting inflation expectations on financial markets.

These factors continued to negatively affect the confidence in the manufacturing sector, which is most exposed to worldwide trade, and this is expected to reduce growth prospects for the remainder of the year.

The commission maintained unchanged its forecasts for Britain, whose economy is foreseen growing 1.3% this year and next.