On Tuesday, the European Commission reduced its forecast on economic growth and the level of inflation for the Eurozone amid weak global growth.
In its spring economic forecast «Spring 2016 Economic Forecast», The European Commission has reduced expectations of growth in gross domestic product (GDP) in 2016 to 1.6% from 1.7%, which it predicted in the winter forecast.
It also reduced its growth forecast for the Eurozone economy in 2017 to 1.8% from previous 1.9%.
"Economic growth in Europe is expected to remain modest, since the indicators of the key trading partners slowed, and some of the factors, which still give support, begin to weaken," – says the EU Commission in its report.
In addition, the Commission also noted that the outlook for global growth remains weak, alluding to the significant risks surrounding the European economy.
"The external risks include the possibility that the slowdown in growth in emerging markets, especially China, can cause severe side effects or will be worse than expected," – explains the European Commission and adds that the uncertainty associated with the geopolitical tensions, sharp fluctuations in oil prices and turmoil in financial markets, is also a part of the risk.
"In addition, the risks associated with internal developments in the EU remain significant, as, for example, in relation to the pace of structural reforms implementation and the uncertainty on the eve of Brexit referendum", - the report says.
With regards to inflation, the European Commission cut its forecast for 2016 to 0.2% from 0.5% and lowered the forecast for 2017 to 1.4% from 1.5%.
"It is expected that inflation will remain near zero in the near term, as energy prices are lower than those that were a year ago" - said the European Commission.