Notwithstanding the latest economic indicators, which suggest that the growth cycle may have peaked, the growth momentum is expected to continue. Domestic demand remains the mainstay of the ongoing recovery, underpinned by the ECB’s monetary policy measures. Private consumption is supported by employment gains and increasing household wealth. Business investment has strengthened amid improvements in corporate profitability, very favourable financing conditions and solid demand.
In addition, euro area exports are benefiting from the broad-based global expansion. The latest ECB staff projections put annual real GDP growth at 2.4% in 2018, 1.9% in 2019 and 1.7% in 2020. While recent data releases have overall been weaker than expected, risks to growth remain broadly balanced. Downside risks continue to be related primarily to global factors, including rising protectionism.