Euro zone: 2019 may be saved by oil prices, but not 2020

Rising oil prices from the start of 2016 to summer 2018 gave rise to a sharp increase in shale oil investment and production in the United States. Accordingly, excess oil production appeared in the second half of 2018 and oil prices fel l sharply. This will lead to very low inflation in the euro zone in 2019 and provide a strong boost to demand just when a cyclical slowdown was on the cards: the fall in oil prices is therefore likely to “save” growth in the euro zone in 2019. But the fall in oil prices will curb shale oil production in the United States and gradually lead to a rebalancing of the oil market and drive up oil prices. Oil should therefore be expensive again in 2020, probably weakening growth in the euro zone.