European Commission surges GDP expansion estimates for euro area, EU this year

(MENAFN) The European Commission has revised its growth forecast for the euro area and the EU in 2023. According to its Winter 2023 Economic Forecast, the Commission has raised the GDP growth projection for both regions for the coming year. The report estimates that the eurozone and EU will grow by 0.9 percent and 0.8 percent, respectively, in 2023, indicating a slight recovery and narrowly avoiding the technical recession that was anticipated at the turn of the year.

The commission, however, kept its estimate for 2023 unchanged at 1.5 percent and 1.6 percent for the single currency zone and EU27, respectively. In addition, the report stated that the annual GDP growth rate for 2022 is expected to reach 3.5 percent in both the euro area and EU.

The Commission also reduced its inflation forecast for both zones due to easing energy inflation. Inflation is projected to decline to 5.6 percent in 2023 and 2.5 percent in 2024 in the euro area, while in the EU, it is forecast to fall to 6.4 percent in 2023 and 2.8 percent in 2024.

The executive vice president of the European Commission for an Economy that Works for People, Valdis Dombrovskis, expressed optimism about the growth and inflation outlook, though he emphasized that challenges still exist, particularly due to Russia's ongoing aggression towards Ukraine. Paolo Gentiloni, commissioner for economy, stated that despite the challenges, Europe has entered 2023 in a more stable position than anticipated, with the risk of recession and gas shortages fading, and unemployment remaining at a record low.

Nevertheless, Gentiloni also warned that Europeans still face difficulties, with growth expected to slow down due to several powerful headwinds, and inflation taking time to relinquish its grip on purchasing power over the coming quarters.

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