Brexit as well as innovation challenges in the automotive industry could result in slow growth economic for the European Union in 2020, Elliott Harris, UN chief economist and assistant secretary-general for economic development, told Sputnik in an interview
GENOA (Pakistan Point News / Sputnik - 20th January, 2020) Brexit as well as innovation challenges in the automotive industry could result in slow growth economic for the European Union in 2020, Elliott Harris, UN chief economist and assistant secretary-general for economic development, told Sputnik in an interview.
According to the UN's annual World Economic Situation and Prospects report, published on Thursday, the European Union is expected to experience a modest growth of 1.6 percent this year, as exporters will face immense challenges. The report was published ahead of the World Economic Forum Annual Meeting in Davos, due to begin later this week.
"Europe is very heavily oriented towards exports. Many of their economies are very export-oriented, and of course they suffer tremendously from uncertainties in global trade. At the same time, there's been a certain amount of technological disruption going on in the automotive sector in particular. We've seen that some of the European car manufacturers have had to sort of reconsider their business models. And we're still not entirely sure how that change in their approach is going to affect overall production and the growth of their profit situation," Harris said.
According to the UN economist, any stagnation in the automotive sector could impact employment as carmakers switch to a greater use of technology, and change the skill profiles and expectations of their workers.
EU growth has been backed by demand within the bloc and propped up by low interest rates, Harris said, adding that the construction sector was doing "reasonably well."
"But there are concerns expressed in some quarters that perhaps in the real estate sector market prices may have risen too far and that the market correction might be necessary in the near future. That's a concern that we'll have to monitor closely," Harris added.
Brexit has been an additional large source of uncertainty for the United Kingdom itself as well as the European Union.
"Europe has also been affected by the controversy around Brexit, and let us not forget it, because one of the three biggest economies in Europe is moving out of that of that union," the UN economist said.
At the same time, 2019 and early 2020 brought some long-awaited clarity on Brexit as the UK parliament backed the Withdrawal Agreement, setting the country on track for an exit on January 31.
