"Growth in the euro area was stronger than expected in the first quarter of the year due to a number of temporary factors such as mild winter conditions and a rebound in auto sales", the commission said. It also benefited from fiscal policy measures, which boosted household disposable income in several member states. These have continued to weigh on confidence in the manufacturing sector, which is the most exposed to global trade, and are projected to weaken the growth outlook for the remainder of the year.
In its Summer 2019 Economic Forecast, published on July 10, the European Commission says that growth in the euro area was stronger than expected in the first quarter of the year due to a number of temporary factors such as mild winter conditions and a rebound in vehicle sales.
France's economy will expand 1.3 percent this year and 1.4 percent in 2020, the commission estimated, leaving unchanged its forecast for this year but lowering the estimate for the next, earlier seen at 1.5 percent. The resilience of our economies is being tested by persisting manufacturing weakness stemming from trade tensions and policy uncertainty.
Inflation in the European Union is projected at 1.5 percent in both 2019 and 2020, while in the euro area - at 1.3 percent.
Now its 10th year of expansion, the German economy returned to growth between January and March, posting a 0.4% expansion, but the Bundesbank expects a small contraction in the second quarter. Domestic demand, in particular household consumption, continues to be a driving force for economic growth in Europe thanks to the continuing increase in the labor market.More news: Study finds possible link between sugary drinks and cancer
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The final data showed EU-harmonised prices rose by 0.3% on the month - revised up from 0.1%.
The commission underlined that economic issues between the USA and China may prolong downturn in global trade and manufacturing.
The indicators have been hit by uncertainty over global trade conflicts, a string of one-off effects, and the fizzling out of the upswing that followed the region's financial crisis. "Due to the assumed fall in fuel prices, energy prices are expected to have a somewhat lower impact on inflation than previously forecast", the Commission said.
"On the domestic side, given the purely technical assumption of status quo in terms of trading relations between the EU27 and the United Kingdom, a "no deal" Brexit remains a major source of risk", the forecast read. Finally, there are also significant risks surrounding near-term growth drivers and economic momentum in the euro area. Inflation in Lithuania is projected at 2.2 percent this year and 2.1 percent in 2020.
Speaking in Frankfurt just before the account was published, European Central Bank board member Benoit Coeure said the pessimism implied such instruments should be taken as a pinch of salt and estimates by professional forecasters and households were more benign.