Inflation to Fall Faster and Economy to Grow Slower in EU, New Forecasts Suggest.
The Commission's new forecasts for the EU economy point to lower-than-expected growth rates in 2023, while inflation is expected to accelerate its current downward trend this year. In 2024, growth is expected to reach 0.9 percent (from 1.3 percent) in the European Union and 0.8 percent (from 1.2 percent) in the euro area, while inflation in the EU will fall from 6.3 percent in 2023 to 3.0 percent in 2024 and 2.5 percent in 2025.
In 2023, growth was hampered by a number of factors, as households had less money to spend and interest rates were high. But this year, economic activity in the EU is expected to increase gradually. As inflation continues to fall, real wages are expected to rise, and consumers are expected to spend more due to a flexible labor market. In addition, trade with foreign partners, which performed very poorly last year, is expected to normalize.
2023 inflation fell faster than expected, mainly due to lower energy prices. However, current geopolitical tensions, particularly in the Middle East, could lead to trade disruptions as energy support measures across Member States will soon expire. Nevertheless, these two factors are expected to contribute to higher prices. However, inflation will continue to fall, and rising food prices will be controlled.
The Commission has published four economic forecasts covering GDP and inflation data for all Member States, the EU, and the euro area. You can access them via the links below.
Press release: A delayed rebound in growth amid faster easing of inflation
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