Growth rates of 2.2% this year, and 2.3% in 2025, the Commission foresees for Greece with her spring predictions. For the Eurozone, the Commission predicts growth of just 0.8% and 1% respectively.

As far as inflation is concerned in our country, it is expected to reach average levels of 2.8% this year and 2.1% in 2025, i.e. at similar levels to the eurozone.

The general government budget deficit is projected to decline further to 1.2% of GDP in 2024 and 0.8% in 2025. The primary surplus is expected to continue to increase to 2.3% in 2024 and 2.5 % of GDP in 2025, due to revenue growth and expenditure containment.

The public debt It is expected to decline from 161.9% of GDP in 2023 to 153.9% in 2024 and 149.3% in 2025, supported by rising primary surpluses, nominal growth and inventory adjustments related to, among others, significant revenues from the Egnatia and Attica Road concessions.

EU

After the economic stagnation that prevailed in 2023, better-than-expected growth in early 2024 and the continued decline in inflation set the stage for a gradual expansion of economic activity over the forecast horizon.

In the autumn forecasts of the European Commission, GDP growth in 2024 is forecast by 1.0% in the EU and by 0.8% in the euro area. In 2025, GDP growth is projected to accelerate to 1.6% in the EU and 1.4% in the euro area. Inflation in the EU (based on the harmonized index of consumer prices) is expected to decline from 6.4% in 2023 to 2.7% in 2024 and to 2.2% in 2025. In the euro area, it is projected to slow from 5.4% in 2023 to 2.5% in 2024 and to 2.1% in 2025.

A return to growth thanks to an acceleration in private consumption

According to Eurostat’s preliminary estimate, GDP rose slightly by 0.3% in both the EU and the euro area in the first quarter of 2024. This expansion, which was broad-based across all member states, marks the end of of the prolonged period of economic stagnation that began in the last quarter of 2022.

Growth in economic activity this year and next is expected to come largely from a steady expansion in private consumption, as continued growth in real wages and employment underpins growth in real disposable incomes. However, the stronger propensity to save still partially constrains private consumption.

Conversely, investment growth appears to be weakening. As a result of the negative cycle of housing construction, it is expected to increase only gradually. While credit conditions are expected to improve over the forecast horizon, markets now expect a slightly more gradual rate cut path compared to the winter.

Amid a resilient global economy, the recovery in trade is expected to support EU exports. However, as domestic demand in the EU recovers, an acceleration in imports will largely offset the positive contribution of exports to growth.

Inflation is expected to continue to decline

Inflation (based on the harmonized index of consumer prices) continued its sharp decline from the peak of 10.6% (annualized) recorded in October 2022 in the euro area. In April this year, it is estimated to have fallen to 2.4%, the lowest level in two years.

Starting from the lower-than-expected level recorded in the first months of this year, inflation is projected to continue to decline and reach the target slightly earlier in 2025 than predicted in the winter interim forecasts. The decline in inflation is expected to be mainly driven by non-energy goods and food items, while energy inflation is showing some growth and services inflation is only gradually declining, alongside the containment of wage pressures. Inflation across the EU is expected to follow a similar path, although it will remain slightly higher.

The labor market remains strong despite modest growth

Despite the slowdown in economic activity, the EU economy created more than two million jobs in 2023, while in the last quarter of the year the activity and employment rates of people aged 20-64 reached new record highs of 80.1% and 75.5 %, respectively. Many labor markets across the EU remain tight. In March, the EU unemployment rate fell to a historic low of 6.0%. This good labor market performance is due to both strong labor supply – supported, among other factors, by immigration – and labor demand.

EU employment growth is projected to slow to 0.6% this year and then moderate further to 0.4% in 2025. The EU unemployment rate is expected to remain broadly stable around its historical its low level.

In line with the expected continued deflation of inflation, nominal wage growth in the EU has started to slow after peaking at 5.8% in 2023. Going forward, it is expected to slow further.

The withdrawal of emergency support measures in the energy sector is expected to lead to a reduction in government deficits

After the significant reduction in the EU budget deficit in 2021 and 2022, its reduction stopped in 2023 as economic activity weakened. It is projected to begin declining again in 2024 (3.0%) and 2025 (2.9%). in particular thanks to the phasing out of support measures in the energy sector.

Amid higher debt servicing costs and lower nominal GDP growth, the debt-to-GDP ratio in the EU is expected to stabilize at 82.9% this year and then rise by around 0.4 percentage points in 2025.

Increasing uncertainty amid geopolitical tensions

Uncertainty and downside risks to the economic outlook have increased further in recent months, mainly due to the development of Russia’s protracted war of aggression against Ukraine and the conflict in the Middle East. Broader geopolitical tensions also continue to pose risks. In addition, persistent US inflation may cause further delays in interest rate cuts in the US and beyond, resulting in some increased tightness in global financial conditions.

On the domestic front, the decline in inflation may be slower than forecast, with EU central banks likely to delay interest rate cuts until the downward trend in services inflation stabilises. In addition, some Member States may introduce additional fiscal consolidation measures in their 2025 budgets – not currently factored into this forecast – which could affect economic growth next year. At the same time, the decline in the propensity to save could boost consumption growth, while investment in housing construction could recover more quickly. The risks associated with climate change are increasingly weighing on the economic outlook.

Record

These forecasts are based on a set of technical assumptions regarding exchange rates, interest rates and commodity prices, with a cut-off date of 25 April. For all other data inputs, as well as assumptions about government policies, these forecasts take into account data collected up to 30 April. Forecasts are based on the assumption of unchanged policies unless new policies have been announced and specified in sufficient detail.

The European Commission publishes two comprehensive series of forecasts (spring and autumn) and two intermediate ones (winter and summer) every year. The two consolidated forecasts cover a wide range of economic indicators for all EU member states, candidate countries, EFTA countries and other major advanced and emerging market economies. Interim forecasts cover annual and quarterly data on GDP and inflation for the current and next year for all Member States, as well as aggregated data at EU and euro area level.

The European Commission’s 2024 summer economic forecasts will update the GDP and inflation forecasts reported in this publication and are expected to be presented in September 2024.

“The EU economy has remained stable in the face of the unprecedented challenges it has faced in recent years; we can now look forward to a return to moderate growth rates, which will pick up further in 2025. Labor markets continue to hold up well with high rates employment, and private consumption is increasing. However, the global landscape still holds many risks for the EU, with geopolitical tensions rising and persisting. In this volatile environment, it is important to use all the levers at our disposal to strengthen our resilience and competitiveness. First, member states should focus on sustainable growth-enhancing reforms and investments combined with more prudent fiscal policies to reduce high debt ratios. Second, we must do everything to boost investment. NextGenerationEU is already helping significantly, but there is much more we can do to boost private investment – ​​removing cross-border barriers and completing the Capital Markets Union remain essential. Third, we must continue to reap the benefits of our open trade model, including by entering into trade agreements with partners we trust.”said Mr. Valdis Dombrovskis, Executive Vice President for an Economy in the Service of People

“The EU economy improved markedly in the first quarter, which shows that we have now turned the page after a very difficult 2023. We expect growth to pick up gradually during this year and next, as private consumption is supported by the decline in inflation, the recovery of purchasing power and continued employment growth. Government deficits are expected to gradually decline after the withdrawal of almost all energy support measures, but public debt will rise slightly next year, underscoring the need for fiscal consolidation while protecting investment. Our forecasts remain marked by intense uncertainty and – as two wars continue to rage not far from the Union – downside risks have increased.”said Mr. Paolo Gentiloni, Commissioner for Economy.