French.china.org.cn | Updated on 14-02-2023
The European Union (EU) and the euro zone should narrowly avoid a technical recession, according to the European Commission’s Winter 2023 Economic Forecast published on Monday.
Growth prospects for 2023 have risen to 0.8% for the EU and 0.9% for the eurozone, according to the document, which was presented by EU Economics Commissioner Paolo Gentiloni. This represents respectively 0.5 and 0.6 percentage point more than in the Fall Forecast.
“Both areas should now narrowly avoid the technical recession that had been anticipated for the new year,” the Commission said.
The 2022 growth rate for the EU and the eurozone is estimated at 3.5%, Gentiloni added.
Positive developments that have helped improve the growth outlook for 2023 since the fall include a drastic reduction in the price of gas as well as a strong labor market.
Europe’s benchmark gas price fell below the level it had before the Russian-Ukrainian conflict thanks to lower demand, mild temperatures and a diversification of gas supply, explained the commissioner.
The resilience of European businesses and households also played a major role, with consumption 25% below the 2017-2021 average in October and November. The EU’s gas consumption reduction target has thus been more than met.
The labor market has also remained strong, while the unemployment rate is still at its lowest level of 6.1% at the end of 2022.
Headline inflation in the EU is expected to fall from 9.2% in 2022 to 6.4% in 2023 and finally reach 2.8% in 2024.
Eurozone inflation is expected to follow a similar trend, rising from 8.4% last year to 5.6% this year and 2.5% next year.
Nevertheless, according to forecasts, the turbulence remains significant. Consumers and businesses are still facing high energy costs and core inflation continued to rise in January, further eroding household purchasing power. While inflationary pressures persist, monetary policies should continue to tighten and thus weigh on commercial activity and curb investments.
Inflation risks remain largely associated with market developments and reflect some of the identified risks to growth. Particularly in 2024, upside inflation risks will prevail because, should wage growth stabilize at above-normal levels for an extended period, price pressures could become more widespread and deep than expected.