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Forecast: EU economy grows but with reduced momentum

Forecast: EU economy grows but with reduced momentum

The economy of the European Union continues to grow, albeit with reduced momentum, according to the European Commission Summer Economic Forecast, presented Monday.

The forecast revises growth in the EU economy down to 0.8 percent in 2023, from one percent projected in the Spring Forecast, and 1.4 percent in 2024, from 1.7 percent.

It also revises growth in the euro area down to 0.8 percent in 2023 (from 1.1 percent) and 1.3 percent in 2024 (from 1.6 percent).

Inflation is expected to continue to decline projected to reach 6.5 percent in 2023 (compared to 6.7 percent in the spring) and 3.2 percent in 2024 (compared to 3.1 percent) in the EU.

In the euro area, inflation is forecast to be 5.6 percent in 2023 (compared to 5.8 percent) and 2.9 percent in 2024 (compared to 2.8 percent).

The global economy has fared somewhat better than anticipated in the first half of the year, despite a weak performance in China.

Russia’s ongoing war against Ukraine and wider geopolitical tensions continue to pose risks and remain a source of uncertainty.

Energy prices are set to continue declining for the remainder of 2023, but at a slowing pace. They are projected to increase slightly again in 2024, driven by higher oil prices, it said.

“The EU avoided a recession last winter – no mean feat given the magnitude of the shocks that we have faced. However, the multiple headwinds facing our economies this year have led to a weaker growth momentum than we projected in the spring,” said Paolo Gentiloni, EU Commissioner for Economy in press statements.

Source: Kuwait News Agency