Eurozone: Headwinds and silver linings

The trade-war and increased uncertainty will put a significant dent in Eurozone growth in the coming years, with the last quarters of this year potentially seeing modest declines in GDP. We don't forecast a deep recession, however, and don't foresee a major surge in unemployment. From next year strategic investments in defense and infrastructure are expected to support growth. We believe near-term risks to our growth outlook are tilted to the downside, while further out the defense and investment push provide upside risks. The more the current trade war escalates, the higher the need for Europe to make tough choices, support essential industry, tackle structural weaknesses and unlock internal potential.