EC has improved its forecast for EU economic growth in 2024

The European Commission (EC) has improved its forecast for EU economic growth in 2024 to 1% from the previously expected 0.9%. This is stated in the new spring forecast of the institution.

The forecast for eurozone GDP growth this year remained at 0.8%.

In 2025, the EU’s economic growth rate will accelerate to 1.6%, and the eurozone’s to 1.4%. In February, the European Commission forecasted GDP growth in the bloc and the euro area in 2025 by 1.7% and 1.5%, respectively.

«The growth in economic activity this year and next year is expected to be mainly driven by a continued expansion of private consumption, as the continued increase in real wages and employment will contribute to the rise in real disposable income,» the EC said.

According to the EC’s forecast, Germany’s economy will grow by 0.1% this year and by 1% – next year, France’s by 0.7% and 1.3%, and Italy’s by 0.9% and 1.1%, respectively.

Headline inflation (HICP) in the EU is expected to decline from 6.4% in 2023 to 2.7% in 2024 and 2.2% in 2025. In the euro area, it will slow from 5.4% last year to 2.5% in 2024 and 2.1% – in 2025.

The decline in inflation will be driven mainly by non-energy goods and food. At the same time, energy prices are rising, and inflation in services will slow very gradually.

The recovery in global trade will support exports from the EU. However, an increase in imports amid a recovery in domestic demand will largely offset the positive impact of exports on European economic growth.

«The EU economy has held steady in the face of exceptional challenges in recent years, and we can now look forward to a return to modest growth rates that will continue into 2025. Labor markets continue to hold up well with high employment levels and private consumption is growing. However, the global landscape remains fraught with risks for the EU, with geopolitical tensions rising and persisting. In this volatile environment, it is crucial that we use all available levers to enhance our resilience and competitiveness,» said Valdis Dombrovskis, Executive Vice President of the European Commission.

As GMK Center reported earlier, the seasonally adjusted GDP of the euro area and the EU in January-March 2024 increased by 0.3% compared to the previous quarter. In the fourth quarter of 2023, the eurozone economy fell by 0.1% q/q, while the EU remained stable, according to preliminary data from Eurostat.