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The current positive economic trend is to continue, yet at a slower pace. At 2.3 , EU GDP growth in 2017 surpassed expectations, but GDP growth is expected to slow to 2.1 per cent in 2018 and 1.9 per cent in 2019. The Netherlands, Austria and Germany are expected to outperform their EU peers in 2018, but in these three countries growth rates will moderate after 2018 as well.
Consumer spending, which has been the bedrock of Eurozone recovery, is expected to continue to grow in 2018 and onwards, but at a slower pace. The recovery in employment is the main reason for this upwards trend in consumer spending, supported by recent structural reforms to contain wages or to encourage job creation in some EU countries. However, forecasted at seven per cent in 2019, unemployment rates in the EU remain high, impacting the level of wealth and consumer spending.
Other factors that may slow down economic growth in the medium term are mainly the lack of structural reform in the EU, including financial and fiscal fragilities stemming from the crisis, as well as potential asset bubbles, the reversal of extremely low interest rates and a retrenchment in globalisation and trade.
We expect consumer markets and industrial manufacturing and automotive – already the largest industries in many European countries - to contribute the most to national GDP figures in the coming years. The highest industry growth rates, however, are expected in the services sector, in technology, media and entertainment and in financial services.