The EU Commission is somewhat more skeptical about the economy in the euro area and sees high geopolitical risks for the economy. The Brussels authority expects the countries of the monetary union to continue to see an increase in gross domestic product (GDP) of 0.8 percent in 2024, but is only expecting an increase of 1.4 percent next year. This emerges from the spring forecast presented on Wednesday. In February, the commission had predicted 1.5 percent growth here.
The European economy recovered significantly at the beginning of 2024, which shows that the turnaround has now been achieved after the very challenging year of 2023, said EU Economic Commissioner Paolo Gentiloni. “Over the course of this year and next, we expect growth to gradually accelerate as private consumption is supported by falling inflation, a recovery in purchasing power and continued employment growth.”
However, Gentiloni also sees increasing downside risks and pointed to the conflict in the Middle East and Russia’s war in Ukraine. “Our forecast remains subject to a high degree of uncertainty – with two wars still raging not far from home.”
The Commission is particularly pessimistic about the situation in Germany. Here she only expects the economy to grow by 0.1 percent this year. Apart from Finland, where stagnation is expected, no EU state will do worse in 2024. The economists also significantly lowered their economic forecast for Germany this year. Instead of the 0.7 percent growth expected in the fall, they only predicted an increase of 0.2 percent for the federal government in their spring report, as the Reuters news agency learned from two insiders on Tuesday.
In its forecasts, the EU Commission estimates that price pressure will ease significantly this year. In 2024, she expects an inflation rate (HICP) of 2.4 percent for Germany, calculated for European comparison. Last year, this inflation rate in this country was 6.0 percent. For the euro zone, the Commission expects inflation of 2.5 percent for the current year, which is expected to weaken to 2.1 percent in 2025. That would be very close to the European Central Bank’s (ECB) target of 2.0 percent, which sees this as ideal for the economy.