The European Commission downgrades its forecast for Eurozone GDP growth

The European Commission has cut its GDP growth forecast for the eurozone for this year due to high inflation and overall weakness in economic activity. According to the latest data, the eurozone economy is expected to grow by 0.6%, which is 0.2 percentage points less than the previous expectations announced in the September forecast.

According to the Financial Times, this is a new signal of a worsening environment for the eurozone, which for the first time is marked by high inflation and low economic activity. The European Commission notes that global events, such as Russian aggression in Ukraine and the conflict in the Middle East, have further increased uncertainty and risks for the European economy.

The European Commission considers finding ways to restore the EU's economy and increase competitiveness to be the most urgent task, even in a report that indicates that the €800 billion stimulus program has not produced the expected recovery. However, the newspaper emphasizes that high inflation and the energy shock caused by the events in Ukraine have limited European production.

The European Commission's forecast suggests that both the EU and the eurozone will grow by 0.6% in 2023, the second downgrade of this year's forecast. In 2024, the EU economy is expected to grow by 1.3%, which is 0.1 percentage points less than previously expected.

Given the new forecast, experts warn that there is little chance of a quick recovery, especially given the recent increase in interest rates, which has not yet fully impacted consumers and businesses due to low rates on long-term loans.