The European Commission on Monday issued its forecasts for future developments in the international economy.
In a press release on Monday morning, the European Commission said it expects economic growth of 0.8 percent in 2023. This is a downward revision from the previous spring forecast of 1 percent.
They also cut their growth forecast in 2024 to 1.4 percent, from the previous 1.7 percent.
Valdis Dombrovskis, EU Economic Vice-President, stressed in the press release that although the economy is on the way to growth, there are many danger signs on the way.
– The uncertainty is great and we have to monitor risk factors on the road, says Dombrovskis.
Russia’s war against Ukraine was noted in the press release as one of the most important uncertainties.
– Headwinds
Meanwhile, the Committee stresses that inflation will continue to moderate. This is mainly due to lower energy prices, as well as price pressure on food products, the press release said.
When the Commission presented its 2023 forecasts in February, it was optimistic about avoiding a recession.
-We avoided a recession this winter. However, the headwinds our economies face this year have led to weaker growth momentum than we expected this spring. Inflation is decreasing, but at different speeds in the European Union. Paolo Gentiloni says Russia’s brutal war against Ukraine continues to cause human suffering, but also economic disruption.
We expect a decline in Germany
Europe’s largest economy is the only one in which the European Union expects a decline. The German economy stagnated in the second quarter and achieved much lower GDP numbers in the first and second quarters. The annual growth in GDP numbers so far has been minus 0.4 percentage points. Export numbers have also been weaker than expected so far this year, the committee wrote in a separate news release.
They expect a slight increase in GDP numbers of 1.1 percent in 2024. At the same time, they expect inflation to reach 2.8 percent at the end of next year.
Highest level since 2001
At the end of July, the European Central Bank raised interest rates in the euro zone to the highest level since 2001. Meanwhile, there may be another increase later in September.
The main interest rate at the European Central Bank is now 3.75 per cent.
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