The EU executive has issued yet another stark warning that a sudden rise in trade protectionism is the No.1 risk for economic expansion in the EU. The bloc’s latest outlook urged reforms before the next downturn.Growth in the European Union was expected to remain robust in 2018, although trade tensions with the United States presented an “unambiguously negative risk,” the European Commission warned in its latest economic forecast Thursday.
Brussels said economic expansion in the 28-member bloc was to fall slightly to 2.3 percent of gross domestic product (GDP) this year, after reaching a 10-year high of 2.4 percent in 2017.
The forecast came a day after the bloc’s statistics office (Eurostat) said growth in the eurozone slowed in the first quarter, fueling fears that Europe’s economy as a whole was losing steam.
Officials had long warned that now was the time to press ahead with reforms in anticipation of the next downturn, adding that a slump might not be far away given the current trade spat over higher US tariffs that might also hit the European Union.
Higher tariffs or not?
“The biggest risk to our rosy outlook is protectionism, which must not become the new normal,” EU Economic Affairs Commissioner Pierre Moscovici warned Thursday.
Brussels is negotiating with Washington to secure a permanent exemption from higher tariffs on steel and aluminum imports, but the impact of the tariffs on other nations including China is likely to harm Europe’s economy even if US President Donald Trump decides not to target allies directly.
Moscovici’s economic report also emphasized that employment in the eurozone was at its highest since the launch of the single currency.
It added that for the first time since the introduction of common budget rules, all eurozone nations were expected to keep their public deficits below the EU-mandated ceiling of 3.0 percent of GDP.
hg/jd (dpa, AFP)
