The latest report from EUROFRAME – European Forecasting Network reveals that the economic upturn in the Euro area lost some momentum in the first half of 2007.
Quarterly real GDP growth in the Euro Area slowed to 0.3% in the second quarter of 2007, down from a stronger than expected 0.5% in the first quarter.
However, there is an impression that actual economic developments in the second quarter could have been somewhat stronger than is implied by recent national account statistics.
It expects the UK economy to grow by 2.9% this year, by 2.2% in 2008 and 2.5% in 2009. The slowdown is led by a moderation in consumer spending growth due to a cooling housing market. If the recent turmoil in financial markets were to prove more protracted than we have assumed then we should expect to see UK economic growth slow by more next year, as households and business respond to the associated uncertainty and increased cost of finance.
Real GDP in Germany is projected to increase by 2.2% next year, followed by 2 percent growth in 2009. For France, the corresponding growth projections are 2.3% and 2.1%. For Italy, we are forecasting real GDP growth of 1.5% in 2008 and 1.7% in 2009.
It expects the US economy to grow by 1.9% this year and by 2% in 2008, both forecasts having been revised downwards since its Spring report. Its growth projection for Japan has also been revised downwards. It now expects growth of 2% this year and 1.7% in 2008.
A recent forecast from OPera Media predicted that the global economy remains on track for continued strong expansion in 2007 and 2008, with the UK economy expected to continue growing on, or near, its 2.5% long run trend in 2007 and 2008 (see Global Economy Remains On Track For Continued Expansion).
A recent estimate from the National Institute of Economic and Social Research suggested that the growth rate of the UK economy slowed slightly in the three months ending in August to 0.7% after 0.8% in the quarter ending in July (see UK Economic Growth Rate Slows Slightly).
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