In 2017, the EU economy performed significantly better than expected at the beginning of the year;
the result of improved labour market conditions and stronger domestic demand. The EU’s GDP
grew by 2.4% last year, marking the highest growth rate in 10 years. For its Winter Forecast, the
European Commission also revised its projections upwards: EU GDP is now estimated to grow by
2.3% in 2018 and 2.0% in 2019. Nevertheless, the Brexit negotiations and a global trend towards
more protectionist trade policy are still posing a serious threat to this growth.
Despite increasing energy prices, inflation in the European Union is forecast to rise only modestly in
the next few years. According to the Commission’s latest estimates, the HICP1
reached 1.7% in 2017. Looking ahead, inflation is expected to increase slightly to 1.9% in 2018 and
then reduce to 1.8% in 2019.
Thanks to the improving EU labour market, unemployment is expected to continue to decrease in
the years to come, reaching the lowest level since early 2009. The EU unemployment rate is
projected to decline from 7.8% last year to 7.0% in 2019, as strong domestic demand and moderate
wage growth will continue to sustain job creation.