But the stand out from report here is that they see mounting risks from Italy
- 2018 growth forecast at 2.1% (unchanged)
- 2020 growth forecast at 1.7%
- Eurozone 2018 inflation seen at 1.8% (previously 1.7%)
- Eurozone 2019 inflation seen at 1.8% (previously 1.7%)
- Eurozone 2020 inflation seen at 1.6%
- Sees Italy deficit at 1.9% in 2018, 2.9% in 2019, 3.1% in 2020
- Italy 2018 growth forecast at 1.1% (previously 1.3%)
- Italy 2019 growth forecast at 1.2%, 2020 growth forecast at 1.1%
- UK 2018 growth forecast at 1.3% (unchanged)
- UK 2019 growth forecast at 1.2% (unchanged)
- UK 2020 growth forecast at 1.2%
- Germany 2018 growth forecast at 1.7% (previously 1.9%)
- Germany 2019 growth forecast at 1.8% (previously 1.7%)
- Germany 2020 growth forecast at 1.7%
The lower growth forecast next year is not a surprising revision. The key takeaway for me is that they are viewing that Italy will breach the 3% deficit limit by 2020. That's a bit of a bearish narrative and builds the rhetoric that there is a divide between Italy's government and European officials.
It certainly presents a real case of a dispute between the two and that will add some risks to the euro over the next few months.
