In European Commission’s Autumn Economic Forecasts, 2023 GDP growth forecast has been lowered to 0.6%, a reduction from the earlier summer forecast of 0.8%. Outlook for 2024 is also tempered, with GDP growth projections scaled back to 1.2%, compared to previous 1.3%. However, there is an anticipation of pickup in growth to 1.6% in 2025.
In terms of inflation, 2023 forecast remains unchanged at 5.6%. However, there was an upward adjustment for 2024, with inflation rate now predicted to be 3.2%, higher than summer’s forecast of 2.9%. The Commission expects inflation to decelerate further in 2025, slowing to 2.2%.
Valdis Dombrovskis, Executive Vice-President of European Commission, expressed a cautiously optimistic view, stating, “Following very weak growth this year, we can expect growth to rebound modestly in 2024, helped by strong labour markets and continued easing of inflation.” He also highlighted the uncertain geopolitical context, particularly noting the recent conflict in the Middle East and its potential implications.
Paolo Gentiloni, Commissioner for Economy, echoed these sentiments. He pointed out that “Strong price pressures and the monetary tightening needed to contain them, as well as weak global demand, have taken their toll on households and businesses.”
Looking ahead, Gentiloni expects “a modest uptick in growth as inflation eases further and the labour market remains resilient.” He also acknowledged the limited immediate economic impact of the Middle East conflict, while cautioning about the heightened geopolitical tensions and the increased uncertainty and risks they pose for the future economic landscape.
