Economic growth forecasts have been slashed worldwide, demonstrating a particularly bleak outlook for several countries in Europe, a report from the Organisation for Economic Co-operation and Development (OECD) said on Wednesday.
Contributing factors to Europe’s projections include ongoing political uncertainties, unresolved trade issues, investment prospects, and the UK’s imminent departure from the EU.
The eurozone as a whole was initially predicted to see a 1.8% growth for 2019, which has now been slashed to just 1%.
Germany’s forecast was cut by almost 1%, while Italy was the hardest hit with a cut from 0.8% forecast in growth, to a -0.2% contraction.
The large revision in projections for Germany and Italy are a reflection of “their relatively high exposures to the global trade slowdown compared with that of France,” the report said.
In January, Italy also reported having slipped back into recession in 2018.
OECD forecasts for the UK, which were slashed by 0.6%, were based on a smooth withdrawal from the EU.
A disorderly no-deal Brexit “would raise the costs for European economies substantially,” and would contribute to a “significantly weaker” outlook, the report noted.
The Paris-based group further warned that a “major adverse shock” caused by a no-deal Brexit could tip the UK into a “likely near-term recession,” which would have a knock-on effect to trade around the world, but in particular to close partners, such as Ireland, the Netherlands and Denmark, who would be left “relatively exposed.”
One-off factors affecting Europe were also highlighted in the report, such as disruptions to the car industry due to US-EU trade discussions and vehicle emissions tests.