In its quarterly on Monday, The European Commission has revised its economic growth forecast for the Eurozone upwards to 0.9% in 2023 from the previous 0.3%projecting for 2024 an unchanged growth of 1.5%.
Additional comments
The Eurozone will avoid technical recession forecast with quarter-on-quarter growth of 0.1% in the fourth quarter of 2022 and 0.0% in the first quarter of 2023.
Uncertainty around the outlook was high, but risks to growth were broadly balanced.
Domestic demand could be higher than expected if the recent declines in wholesale gas prices pass through to consumer prices more strongly and consumption proves more resilient.
However, a possible reversal of that fall cannot be ruled out in the context of continued geopolitical tensions.
The European Commission lowers its forecast for euro zone inflation for 2023 to 5.6% year-on-year from 6.1% previously forecastand sees inflation of 2.5% in 2024, below the previous forecast of 2.6%.
This forecast depends fundamentally on the purely technical assumption that Russia’s aggression against Ukraine will not intensifybut will continue throughout the forecast horizon.
The German economy will grow slightly this year, revising up its previous contraction forecast of 0.6%. Growth is expected to rebound to 1.3% in 2024.
Source: Fx Street
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