BRUSSELS (BELGIUM) (ITALPRESS) – After a long period of stagnation, the European Union economy is slowly returning to growth as the disinflation process continues. The European Commission’s autumn forecast projects GDP growth in 2024 at 0.9 percent in the EU and 0.8 percent in the eurozone. Economic activity is expected to accelerate and reach 1.5 percent in the EU and 1.3 percent in the euro zone in 2025, and rise further to 1.8 percent and 1.6 percent in 2026, respectively.
In the euro zone, overall inflation is expected to more than halve: from 5.4 percent in 2023 it will rise to 2.4 percent in 2024, and then fall more gradually to 2.1 percent in 2025 and 1.9 percent in 2026. In the EU, even more pronounced disinflation is expected. Overall inflation, at 6.4 percent in 2023, will fall to 2.6 percent in 2024, 2.4 percent in 2025 and 2.0 percent in 2026.
After resuming growth in the first quarter of 2024, in the second and third quarters the EU economy continued to expand at a steady, albeit moderate, pace.
“Employment growth and the recovery in real wages,” the EU Commission explains, “had positive effects on net income, but household consumption was modest: the still high cost of living and the increased uncertainty caused by repeated exposure to extreme shocks, together with financial incentives to save in a high interest rate environment, led households to save an increasing share of their income. Also disappointing was investment, which experienced a deep and widespread contraction in the first half of 2024 across most member states and asset classes.”
Forecasts indicate that on the back of many member states’ efforts to reduce their debt ratios, the EU’s general government deficit will decline by about 0.4 percentage points to 3.1 percent of GDP in 2024, and 3.0 percent in 2025, rising to 2.9 percent in 2026 due to positive economic developments. In the eurozone, a decrease from 3.0 percent in 2024 to 2.9 percent in 2025 and 2.8 percent in 2026 is expected.
However, the EU’s aggregate debt-to-GDP ratio is projected to increase: from 82.1 percent in 2023 to 83.4 percent in 2026. The increase comes after a decline of nearly 10 percentage points between 2020 and 2023 and reflects the effects of still high primary deficits and rising interest expenditure, which are no longer offset by strong nominal GDP growth in the face of lower inflation. In the eurozone, public debt is projected to rise from 88.9 percent of GDP in 2023 to 90 percent in 2026.
“From our autumn forecast we see a European economy that after a very difficult 2023 has returned to growth but at a modest pace, very moderate,” comments European Economy Commissioner Paolo Gentiloni.
“In the meantime there is some good news coming from the fact that inflation is falling and therefore a recovery in household purchasing power is underway, and good news on the labor front. Since the pandemic forward in the European Union, 8 million new jobs have been created, and the level of unemployment is the lowest ever,” he adds. “However, uncertainties are very strong and clearly stem from international wars and tensions, and also from the possible risks of tariff and trade tensions with our American partners. Within this framework the Italian situation is in the European average, with a level of growth more or less similar to that of the Eurozone and with a clear need to strengthen this growth particularly in the coming years. If I have to say one thing that I think we should especially leverage to strengthen growth in the coming years is the Pnrr.”
– Photo Agency Photogram –
(ITALPRESS).
