by Jan Strupczewski
BRUSSELS (Reuters) – Economic growth in the euro zone will be faster than expected in 2023 and 2024, thanks to the dynamism of Italy and Spain, but inflation will remain robust, forecasts show of the European Commission published on Monday.
The European executive expects the euro zone as a whole to increase gross domestic product by 1.1% this year and 1.6% in 2024, while in February it forecast figures of 0.9% and 1.5% respectively.
“The economy of the European Union is managing the adjustment to the shocks caused by the pandemic and the aggression of Ukraine by Russia remarkably well,” the Commission said.
“Last year, the EU largely succeeded in weaning itself off Russian gas. Modest growth in the first quarter dispelled fears of a recession this winter, which seemed inevitable only a few months ago,” she continued.
“Furthermore, survey data suggests that, albeit tepid, the expansion is likely to continue in the second quarter. Better than expected results at the start of the year allow EU economic growth forecasts to be slightly raised “, said the Commission.
A stronger than expected economy, with an expected unemployment rate stable at 6.8% in 2023 and then at 6.7% in 2024, also implies higher inflation, at 5.8% in 2023 and 2.8% in 2024, compared to 5.6% and 2.5% forecast in February.
“Stronger wage increases are expected due to continued tight labor markets, steep minimum wage increases in several countries, and more generally pressure from workers to regain purchasing power,” he said. the Commission.
It foresees a eurozone budget deficit of 3.2% of GDP this year, compared to 3.6% in 2022, then 2.4% of GDP in 2024, which is significantly lower than the public deficit ceiling set by European rules at 3%.
The debt ratio of the 20 countries that have adopted the single currency should also decline and settle at 90.8% of GDP in 2023, against 93.1% last year, before falling to 89.9% in 2024. , according to the Commission.
(Jan Strupczewski, Laetitia Volga, edited by)
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