EY Eurozone Forecast June 2014: Export growth to accelerate in the Eurozone

Eurozone

EY Eurozone Forecast
& Outlook for financial services

  • Share

Will deflation threaten the Eurozone’s recovery?

EY Eurozone June 2014 video

EY Eurozone full webcast: Panel discussion with Steven Lewis, Global Banking & Capital Markets Sector, EY and Tom Rogers, Senior Eurozone Economist, Oxford Economics. Moderator: Sara Walker. More videos >>



Eurozone Forecast June 2014: Recovery continues, but the threat of deflation is mounting

The Eurozone is expected to continue to recover, despite sluggish growth in some core countries. Exports are strengthening and a slow pickup in domestic demand will drive a return to modest investment growth.

We forecast growth of 1.1% for the Eurozone as a whole this year — assuming that the economic effects of the crisis in Ukraine are contained. We expect to see this followed by expansion of 1.5% in 2015, and a slightly faster pace in 2016–18.

The threat of deflation is mounting. Inflation in the Eurozone was just 0.5% in May and the growth of money supply is still weak and slowing in much of the region. Deflation, or even a period of very low inflation, would add to the problems of sluggish growth by raising real levels of debt and by delaying spending and investment decisions.




Next