European Commission Lowers Eurozone Growth Forecast for 2023 and 2024
BRUSSELS, Belgium – The European Commission has revised its economic growth forecasts for the eurozone in 2023 and 2024, citing Germany’s poor performance as a significant factor.
According to the EU’s executive arm, the commission, the German economy is expected to contract by 0.4 percent in 2023, compared to the previously predicted growth rate of 0.2 percent. This decline is expected to have substantial implications for the overall eurozone economy, given Germany’s recession in the industrial sector and lackluster export performance.
In its report, the commission highlights manufacturing weakness and the substantial impact of energy price shocks caused by the war in Ukraine as major factors affecting Germany’s economic performance. Earlier, the International Monetary Fund had already predicted that Germany would be the only major advanced economy to experience contraction in 2023.
However, the eurozone and the European Union as a whole will continue to experience growth, albeit at lower rates than previously forecasted earlier this year. The Commission initially estimated a 1.1 percent growth rate for the eurozone in 2023 but has now revised it down to 0.8 percent.
“The multiple headwinds facing our economies this year have led to a weaker growth momentum than we projected in the spring,” commented EU economy commissioner Paolo Gentiloni, pointing to the “economic disruption” caused by the war in Ukraine.
The growth forecast for the entire 27-nation EU was also revised down to 0.8 percent for 2023, compared to the earlier prediction of around one percent. Furthermore, the eurozone, which comprises 20 countries, is now expected to grow by 1.3 percent in 2024, down from the previous estimate of 1.6 percent.
However, there is some optimism for EU growth, with a slightly better forecast of 1.4 percent for next year.
Regarding inflation, the eurozone inflation forecast has been adjusted downward, with expectations that it will remain well above target at 5.6 percent in 2023, compared to the previous estimate of 5.8 percent. Consumer prices in the eurozone are expected to drop to 2.9 percent in 2024, slightly higher than the 2.8 percent prediction made in May for the following year.
