European Central Bank president Mario Draghi said that the Eurozone’s gradual economic slowdown is normal and temporary to some extent.

Underlying inflation is expected to rise in the coming months, making policymakers confident that the massive asset purchase programme could be ended in December.

He also acknowledged that economic data since September have been somewhat weaker than expected and that the loss in growth momentum mainly reflected weaker trade growth. Eurozone growth halved to 0.2 per cent in the third quarter.

He reiterated that risks relating to protectionism, vulnerabilities in emerging markets and financial market volatility remain prominent.

A report from the UK’s  National Institute of Economic and Social Research (NIESR) warned that Brexit has hit the UK economy hard and the impact would be greater in the long run if the proposed deal is implemented. NIESR said that if the “proposed Brexit deal is implemented, then GDP in the longer term will be around four per cent lower than it would have been had the UK stayed in the EU”.

The NIESR expects the uncertainty about the precise shape of the future relationship to continue beyond the transition period ending on December 31, 2020.

Finally, the US Commerce Department confirmed that  real GDP jumped by 3.5 per cent in the third quarter, unrevised from the initial estimate. It  said that consumer spending, which accounts for about 70 per cent of the economy, surged up by 3.6 per cent compared to the previously reported 4.0 per cent spike.

Overall GDP growth also slowed from the 4.2 per cent increase in the second quarter, reflecting the slowdown in consumer spending growth as well as a downturn in exports and a deceleration in non-residential fixed investment.

A rebound in imports, which are a subtraction in the calculation of GDP, also contributed to the slowdown, while private inventory investment turned higher.

This report was compiled by Bank of Valletta for general information purposes only.