The euro saw a slight weakening yesterday as the European Commission downgrades its forecasts, cutting growth expectations to 1.1%. However, the Commission did emphasise that this is still the seventh year of consecutive growth, and pointed to poor manufacturing performance and external factors such as trade wars and Brexit as dragging the economy down.
The Commission also said that it expects inflation to remain ‘muted’, forecast to rise to 1.2% in the eurozone this year. It said that lower-than-expected growth could still be possible if there is a rise in global tensions, a worse-than-expected slowdown in Chinese growth or a disorderly Brexit.
German industrial production has re-entered negative territory, raising recession fears. However, construction PMI did see a small increase.
