The EU on Thursday cut its eurozone growth forecasts for this year,
warning that the slowdown in China and Europe's biggest migrant crisis
since World War II posed real risks.
For the 19-nation single currency area, still sluggishly recovering
from the financial crisis and the near exit of Greece last year, the
European Commission reduced its 2016 growth estimate to 1.7 percent from
1.8 percent.
"Risks to the economy are becoming more pronounced and new challenges
are surfacing -- slower growth in China and other emerging market
economies, weak global trade as well as geopolitical and policy-related
uncertainty," the Commission said in its winter economic forecast.
It also warned that any suspension of the Schengen passport-free area
as Europe struggles to curb the huge flow of refugees and migrants
would cause further disruption.
The migration crisis, which saw more than one million people brave
risky sea crossings to reach the continent last year, posed "major
political challenges" which could easily undercut growth if not properly
handled, it said.
"A more widespread suspension of Schengen and measures that endanger
the achievements of the internal market could potentially have a
disruptive impact on economic growth," it said.
Brussels has warned of a possible two-year reintroduction of border
controls in the 26-country Schengen area -- effectively suspending free
movement across the zone -- over Greece's failure to secure its borders
amid the migration crisis.