While the European Union (EU) Commission kept the Eurozone’s economic growth expectation this year at 0.8 percent, it reduced it to 1.3 percent for next year.
The EU Commission’s “European Economic Forecasts 2024 Autumn” report has been published.
In the report titled “Slow recovery in a negative environment”, the EU economy is expected to grow by 0.9 percent in 2024, 1.5 percent in 2025, 1.8 percent in 2026, and the Eurozone economy by 0.8 percent in 2024 and 2025. It was predicted to grow 1.3 percent in 2026 and 1.6 percent in 2026.
In the previous “spring” report of the EU Commission, it was estimated that the EU would grow 1 percent in 2024, 1.6 percent in 2025, and the Eurozone would grow 0.8 percent in 2024 and 1.4 percent in 2025.
With the latest report, the EU’s 2024 and 2025 growth forecasts were revised downwards by 0.1 percent. While the growth forecast for the Eurozone was kept constant for 2024, it was reduced by 0.1 percent for 2025.
THE GERMAN ECONOMY WILL SHRINK
The report states that this year Germany will shrink by 0.1 percent, Austria by 0.6 percent, Finland by 0.3 percent, Ireland by 0.5 percent and Estonia by 1 percent, while France will shrink by 1.1 percent. It was estimated that Italy would grow by 0.7 percent and Spain would grow by 3 percent.
The report predicts that Germany will grow by 0.7 percent, France by 0.8 percent, Italy by 1 percent and Spain by 2.3 percent next year. In 2026, Germany will grow by 1.3 percent and France by 2.3 percent. It was estimated that Italy would grow 1.4 percent, Italy would grow 1.2 percent and Spain would grow 2.1 percent.
INFLATION WILL RECREASE
In the report, inflation is expected to be 2.6 percent in the EU and 2.4 percent in the Eurozone this year, and that the inflation rate will decrease to 2.4 percent in the EU and 2.1 percent in the Eurozone in 2025, and 2.1 percent in the Eurozone in 2026. It was estimated that it would decrease to 2 percent in the EU and 1.9 percent in the Eurozone.
The report stated that the EU economy returned to moderate growth after a long period of stagnation, and that the decline in inflation continued.
The report stated that employment growth and the recovery in real wages supported disposable incomes, but household consumption was restricted.
Reminding that the cost of living is still high, the report stated that households are saving an increasing portion of their income in an environment of uncertainty and high interest rates following exposure to extreme shocks.
RISKS ARE INCREASING
The report pointed out that uncertainty and risks were increasing, and noted that the Russia-Ukraine War and increasing conflicts in the Middle East fueled risks to geopolitical and energy security.
Pointing out that US President-elect Donald Trump’s trade policies are also a risk factor, the report said, “A further increase in protectionist measures by trading partners could disrupt global trade and negatively affect the EU’s highly open economy.”
The report stated that policy uncertainty and structural difficulties in the production sector within the EU may lead to further losses in competitiveness, which may negatively affect growth and the labor market.
STATUS OF TURKISH ECONOMY
In the report, which also includes evaluations regarding the Turkish economy, “The tight policy stance is expected to continue to affect domestic demand.” The expression was used.
The report recalls that inflation in Turkey has been falling since May and said, “With the decrease in inflation expectations, the decline in inflation is expected to continue.” evaluation was made.
The report stated that the public deficit is expected to decrease with the decrease in earthquake-related expenditures, and that the public debt will remain moderate.
Pointing out that disinflation and economic balancing will continue despite the high uncertainty environment, the report said, “The Turkish economy has managed very high geopolitical risks and uncertainty well so far.” The statement was included.
In the report, it was predicted that the Turkish economy would grow 3 percent in 2024, 3.2 percent in 2025, and 4 percent in 2026.
