2023-05-15 16:33:24
EU GDP is expected to reach 1% in 2023 and 1.7% in 2024, compared to 0.8% and 1.6% previously.
The European economy continues to show resilience in a challenging global environment and is now expected to grow more than expected over the next two years. This is what the European Commission wants to highlight in its economic forecasts presented Monday in Brussels.
This outlook comes on the back of lower energy prices, easing supply constraints and a strong labor market, allaying fears of a recession.
This better-than-expected start to the year brings growth prospects for the EU economy to 1% in 2023 (compared to 0.8% according to the latest forecasts) and to 1.7% in 2024 (compared to 1 .6% forecast previously), according to the projections.
The upward revisions for the Eurozone are of a similar magnitude, with GDP growth expected to reach 1.1% and 1.6% in 2023 and 2024 respectively.
Ireland is expected to post the strongest growth of the 27 Member States of the Union, with 5.5% this year and 5% in 2024. On the other hand, activity will be negative for Sweden and Estonia, with GDPs of -0.5% and -0.4% respectively.
France is expected to grow by 0.7% this year before progressing further next year to reach 1.4%. The Commission estimates that the French labor market should remain stable in the coming months.
France is expected to grow by 0.7% this year before progressing further next year to reach 1.4%. The Commission estimates that the French labor market should remain stable in the coming months.
But the institution stresses that there is not only encouraging news for the EU. Due to the persistence of pressures on basic prices, inflation is also revised upwards compared to the latest forecasts. It is expected to reach 6.7% in 2023 and 3.1% next year, with weaker projections for the euro area.
Hungary will be hardest hit, with inflation expected to reach 16.4% this year, followed by the Czech Republic and Poland with rates close to 12%.
Luxembourg, Belgium and Spain are expected to experience the lowest inflation rates, between 3 and 4%, this year.
“The EU economy is holding up remarkably well against Russia’s aggression against Ukraine, leading to an upward revision of growth forecasts for 2023 “, judge Valdis Dombrovskis, vice-president of the Commission, in a press release.
“With energy prices clearly falling, governments should be able to phase out support measures and reduce their debt burdens.“
The significant drop in energy prices has repercussions on the economy, reducing companies’ production costs. Consumers are also seeing their energy bills fall, although private consumption is expected to remain weak due to wage growth below inflation.
“Inflation has proven more tenacious than expected, but is expected to decline gradually over the remainder of 2023 and into 2024. The improvement in public finances is expected to continue as energy support measures are phased in. phased out“, says Paolo Gentiloni, European Commissioner for the Economy.
The Commission publishes each year two global forecasts (spring and autumn) and two intermediate forecasts (winter and summer).
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