(Reuters) – The European Commission confirmed on Wednesday its outlook for euro zone gross domestic product (GDP) growth for 2024, while very slightly lowering its expectations for 2025, as it focuses on a gradual expansion in a context of increased geopolitical risks.

According to the spring forecasts of the European executive, the GDP of the 20 countries sharing the euro will increase by 0.8% in 2024, which confirms the forecast announced in February, while it is expected to accelerate by 1.4 % in 2025, compared to 1.5% expected three months ago.

Eurozone GDP grew by 0.3% during the first quarter of 2024, according to the estimate published on Wednesday by Eurostat, an expansion that was widespread across all states in the bloc and marks the end of the period of stagnation which began in the last quarter of 2022, says the Commission.

“After broad economic stagnation in 2023, better-than-expected growth at the start of 2024 and the continued decline in inflation have set the scene for a gradual expansion of activity over the forecast period,” said Wednesday the Commission in a press release.

The European executive thus expects that the harmonized consumer price index (HICP) of the euro zone will slow from 5.4% in 2023 to 2.5% in 2024 and to 2.1% in 2025, against a previous forecast of 2.7% and 2.2% respectively.

“Inflation, starting from a lower figure than expected for the first months of this year, is expected to continue to fall and reach the target value a little earlier in 2025 than predicted in the interim winter forecasts “, declared the European executive.

The European Central Bank (ECB) is targeting inflation of 2% in the euro zone.

(Writing by Diana Mandiá, editing by Kate Entringer)

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