As energy price hike slows, inflation forecast also revised downwards to 5.6% this year
The European Commission on Monday raised its 2023 gross domestic product growth forecast for both the euro area and the EU.
According to the Winter 2023 Economic Forecast from the Commission, the eurozone and the EU are projected to grow 0.9% and 0.8%, respectively, this year.
“Both areas are now set to narrowly avoid the technical recession that was anticipated for the turn of the year,” read the report.
However,it kept the estimate for 2023 unchanged at 1.5% and 1.6% for the single currency zone and the EU27, respectively.
The annual GDP growth rate for 2022 is expected to come in at 3.5% in both the euro area and the EU, it said.
The commission also cut its inflation forecast for both zones thanks to easing energy inflation.
The inflation is projected to decrease to 5.6% in 2023 and to 2.5% in 2024 in the euro area and to 6.4% in 2023 and to 2.8% in 2024 in the EU.
Valdis Dombrovskis, executive vice president of the European Commission for An Economy that Works for People, said the Commission was more optimistic about growth and inflation.
“But we still face multiple challenges, so this is no time for complacency – not least because Russia’s relentless war against Ukraine is still causing uncertainty.”
Paolo Gentiloni, commissioner for economy, stressed that Europe entered 2023 on “a firmer footing” than anticipated as the risks of recession and gas shortages have faded and unemployment remains at a record low.
“Yet Europeans still face a difficult period ahead. Growth is still expected to slow down on the back of powerful headwinds and inflation will relinquish its grip on purchasing power only gradually over the coming quarters,” Gentiloni added.