2023-09-11 14:41:55
Date September 11, 2023 Add Article added Download PDF Share
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The European Commission has revised its growth forecasts downwards compared to its latest spring forecasts and confirms, against a backdrop of contraction in Germany, an economic slowdown in the Union.
The Commission projects growth of 0.8% in 2023 and 1.4% in 2024 (compared to 1% and 1.17% respectively forecast in the spring). The figures are falling in particular because of the slowdown in the German economy which is expected to contract by 0.4% in 2023. This is a downward revision compared to the growth of 0.2% forecast in spring forecasts. The forecasts for the Netherlands have also been revised downwards. The country is expected to experience annual growth of 0.5%, a downward revision of 1.3% compared to the spring forecast. Likewise for Italy, the European executive forecasts growth of 0.9% in 2023 (compared to 1.2% in the spring forecast). On the contrary, the forecasts for France and Spain have been revised upwards: growth should stand at 1% and 2.2% respectively. In Central Europe, against a backdrop of a sharp drop in consumption, in Poland the economy is expected to experience a considerable deceleration and grow by 0.5% in 2023 (compared to 0.7% in the spring forecasts). Inflation forecasts have been revised slightly downwards for 2023 – to 6.5% compared to 6.7% in the spring forecast. In detail, energy prices are expected to continue to decline at a moderate pace. On the demand side, consumption remains particularly weak, due to the persistence of high levels of inflation. In France, the drop in the volume of household consumption particularly affects food spending.
The figures fuel fears of a slowdown in the European economy – coupled with a prolonged period of inflation above the 2% target – which could impact the ECB’s monetary policy decision on Thursday. While the central bank has initiated nine consecutive increases in its key rates since July 27, 2022, the slowdown in the economy could lead the ECB to slow down its pace of rate increases and reduce the intensity of its restrictive monetary policy during of his next decisions.
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