Europe's economic outlook remains murky. Even the most ardent optimists agree that the region will hardly enjoy growth either this year or next. This makes independent experts and officials downgrade their earlier forecasts, taking into account the current realities.
This year, Europe cannot boast robust economic expansion. Moreover, its region is unlikely to report positive economic performance at year-end. Thus, the European Commission has slashed its 2023 growth forecast for the EU economy. It now expects gross domestic product to increase by 0.8% in 2023 and 1.4% in 2024, a press release reads. Earlier, the EC projected GDP growth at 1% for this year and 1.7% next year. To put it briefly, analysts anticipate economic expansion, albeit at a slower rate. Furthermore, consumer inflation is now forecast to come in at 6.5% in 2023 compared to the previous estimate of 6.7%. In 2024, inflation is expected to be 3.2%, up from the earlier projection of 3.1%. In the euro area, the European Commission sees inflation at 5.6% in 2023 (versus 5.8% in the spring forecast) and 2.9% in 2024 (instead of the previous 2.8%).
Rising energy prices are the key inflation driver. Nevertheless, they are set to continue declining for the remainder of 2023, though quite slowly.
"They are projected to increase slightly again in 2024, driven by higher oil prices," the European Commission said.
At the same time, experts noted "an exceptionally strong labor market, which has seen record low unemployment rates, continued expansion of employment and rising wages."
