In its economic predictions the European Commission said eurozone growth this year will increase at a slower pace than it had previously expected, with inflation remaining subdued.
The GDP of the 19 eurozone countries is anticipated to increase by 1.6 per cent this year. The projected increase is less than the 1.7 per cent growth of 2015 and 0.1 per cent less than its February predictions. In 2017, GDP is expected to increase by 1.8 per cent.
Consumer prices are also anticipated to rise less than the previous estimate. The Commission predicts that prices will rise by 0.2 per cent this year, lower than the 0.5 per cent growth prediction in February. Commission vice president Valdis Dombrovskis said the economic recovery in Europe is taking place, but in a less favourable global context.
In the meantime, Bank of England data published last week showed that British mortgage approvals fell for the first time in six months in March, shortly before a new tax took effect.
Nonetheless, consumer borrowing increased at a faster pace in over a decade. Mortgage approvals for house acquisitions amounted to 71,357 in March, a drop from 73,195 in February.
In November 2015, Chancellor of the Exchequer George Osborne had announced that as from April 2016 the government would impose a surcharge on the purchase of buy-to-let properties and second homes. This resulted in an upsurge in the purchase of such properties in the last months prior March as the deadline approached.
Finally, in the US, during April, growth in the manufacturing sector slowed by more than projected, according to a report issued last week by the Institute for Supply Management (ISM).
The ISM stated that its purchasing manager’s index (PMI) fell from 51.8 in March to 50.8 in April. A reading exceeding 50 shows expansion in the manufacturing sector. Economists had projected the index to fall to 51.5.
The bigger than anticipated decline was partly due to a slowdown in the rate of growth in new orders, as the new orders index fell from 58.3 in March to 55.8 in April.
This article was compiled by Bank of Valletta plc for general information purposes only.