The International Monetary Fund (IMF) has revised its forecast for economic growth in Europe in 2018 and 2019, but pointed out that the region is continuing to expand beyond its potential. The domestic demand, backed by more solid employment and higher wages, remains a strong factor in the growth of European economies.
However, European economies face weaker global demand, higher oil prices and trade strains, according to the IMF.
The IMF expects growth of 2.3% in 2018 in Europe compared with 2.8% forecast last year. For next year, the GDP growth is expected to be 1.9%.
In its May economic forecast, the fund predicted growth of 2.6% this year and 2.3% next year.
According to the IMF, short-term economic risks are mostly related to “escalating trade pressure”. In the medium term, growth is expected to slow down due to postponement of fiscal adjustments and structural reforms.
British exit from the European Union without an agreement (Hard Brexit) could lead to trade and non-commercial barriers that will also put pressure on growth. The non-trade barriers include import licensing and rules of origin.