European Commission predicts recovery in eurozone economy
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Economic growth in the eurozone will accelerate in 2025 and 2026, while inflation continues to slow. However, there are risks to global trade due to US protectionism, Russia's aggressive war against Ukraine, and the situation in the Middle East, citing the European Commission's forecast (Autumn 2024).
"Following a prolonged and broad-based stagnation, the EU economy resumed growth in the first quarter of this year. As projected in spring, the expansion continued at a subdued, yet steady, pace throughout the second and third quarters, amidst further abating inflationary pressures," the EC wrote.
US President-elect Donald Trump proposed the idea of introducing tariffs of 10% or more on all goods imported to the US, which is a major trading partner of Europe.
"A further increase in protectionist measures by trading partners could weigh on global trade, with negative impact on the EU's highly open economy," the European Commission reported.
The EU's economic outlook remains highly uncertain, with risks largely skewed to the downside. "Russia’s protracted war of aggression against Ukraine and the intensified conflict in the Middle East fuel geopolitical risks and continued vulnerability of European energy security," the statement said.
Growth forecasts
The European Commission expects that the economy of the 20 countries in the eurozone will grow by 0.8% in 2024, accelerating to 1.3% in 2025 and 1.6% in 2026.
Germany, Europe's largest economy, after two years of production declines in 2023 and 2024, is forecasted to grow by 0.7% in 2025 and by 1.3% in 2026. France is expected to grow by 1.1% in 2024, 1.3% in 2025, and recover to 1.4% in 2026.
At the same time, consumer inflation, which the European Central Bank aims to keep at 2% in the medium term, is expected to slow to 2.1% next year from 2.4% projected in 2024 and slow further to 1.9% in 2026, the European Commission said.
The European Commission improved its growth forecast for Ukraine's economy in 2024 from 2.9% to 3.5%. However, the forecast for 2025 was downgraded from 5.3% to 2.8%.
