EU improves economic growth forecast as inflation decreases

Economic growth in the 20 countries using the euro is projected to be 0.9% this year, instead of the 0.3% projected last November.

The Eurozone will avoid the technical recession the Commission expected three months ago, as growth in the last three months of 2022 was 0.1% from one quarter to the other, while the European Commission provides for a 0.0% figure in the first three months of 2023.

The Commission said uncertainty about the forecast was high, but risks to growth were widely balanced.

Internal demand may be higher than predictions due to the drop in gas prices. However, a possible change cannot be ruled out in the context of continuing geopolitical tensions.

The commission said foreign demand could also result more powerful after the reopening of China, which could spur global inflation, but the risks to inflation were mainly linked to developments in energy markets.

Consumer inflation in the Eurozone, which reached record levels of 10.6% last October, as a result of increased energy and food prices caused by the Russian invasion of Ukraine, will slow to 5.6% this year and 2.5% to 2024.

This would be a slowdown of more than 6.1%, previously expected figure for 2023 and 2.6% for 2024.

This prediction depends largely on the assumption that Russian aggression against Ukraine will not escalate, but will continue throughout the predictive horizon,” said the Commission. /Reuters