BRUSSELS (Reuters) – The European Commission (EC) announced on Monday that it had lowered its growth forecasts for the euro zone for this year and next amid slowing consumer demand amid high inflation and recession in Germany.

The community executive now expects growth for the euro zone as a whole to be limited to 0.8% this year and 1.3% in 2024, whereas in May it forecast figures of 1.1% and 1.6%. % respectively.

“Weak domestic demand, particularly consumption, shows that high and still rising consumer prices for most goods and services are having a heavier impact than expected in the spring forecast,” writes the Commission. European.

“This is happening despite falling energy prices and an exceptionally strong labor market, which has seen historically low unemployment rates, continued employment expansion and rising wages,” she adds. .

The Commission forecasts consumer price inflation in the euro area of ​​5.6% in 2023 and 2.9% in 2024, figures well above the 2.0% target set by the European Central Bank ( ECB). In May, it predicted inflation would reach 5.8% this year and 2.8% in 2024.

Germany, Europe’s largest economy, is expected to record a contraction in GDP of 0.4% this year, according to the Commission, which has revised downwards its growth forecast of 0.2% indicated in May. Next year, German growth is also expected to be slower, at 1.1% instead of the 1.4% previously expected.

France and Spain, on the other hand, could experience faster growth than expected in 2023, indicated the Commission, which anticipates growth of 1.0% and 2.2% respectively, instead of 0.7% and 1. 9% previously announced.

The European Commission’s new forecast for France is in line with that of the French government.

(Reporting Jan Strupczewski; Claude Chendjou, edited by Blandine Hénault)

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