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ECB slashes 2019 growth, inflation outlook
[FRANKFURT] The European Central Bank on Thursday slashed its growth and inflation forecasts for 2019 as "uncertainties" ranging from geopolitical risks to trade rows darken the eurozone economy.
Unveiling updated forecasts, ECB chief Mario Draghi said the bank now expects the region's economy to expand by just 1.1 per cent this year, down from 1.7 per cent previously.
The downgrade is in line with equally gloomy projections from other institutions like the International Monetary Fund and the OECD in recent weeks.
The revisions come as fears grow over a global slowdown in the face of Brexit uncertainty, US-led trade tensions and sluggish Chinese growth.
"The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment," Draghi told reporters in Frankfurt.
"The risks surrounding the euro area growth outlook are still tilted to the downside," he added.
Mr Draghi said the bank was pencilling in inflation of 1.2 per cent this year, a far cry from the 1.6 per cent it had forecast previously and pushing the ECB further away from its target of achieving price growth of just under 2.0 per cent.
"The weaker economic momentum is slowing the adjustment of inflation towards our aim," Mr Draghi said.
Looking further ahead, the ECB revised its 2020 growth outlook downwards from 1.7 to 1.6 per cent while keeping the 2021 forecast unchanged at 1.5 per cent.
Inflation meanwhile is projected to ease to 1.5 per cent in 2020 and 1.6 per cent in 2021, down from 1.7 and 1.8 per cent earlier.