The eurozone economy is set to slow down 0.8 percent this year and 1.3 percent in 2024, the European Commission said on Monday in its updated forecast — a downward revision of 0.3 percentage points compared to May estimates.
A fall in consumption, banks’ tighter lending conditions as a result of higher interest rates, the economic slowdown in China and related slump in exports all mean that the single currency area is winding down its engines, the EU executive said.
“While we avoided a recession last winter, the multiple headwinds facing the EU economy this year have led to somewhat weaker growth momentum than we projected in the spring,” EU Economy Commissioner Paolo Gentiloni said on Monday in a press conference.
Out of the six largest EU countries for which the Commission updated growth estimates on Monday, Germany is the only one set to contract this year — by -0.4 percent — before returning to growth of 1.1 percent next year. France and Spain see a small uptick in growth in 2023 (+0.3 percentage points each), while Italy, Poland and the Netherlands all see their forecast worsen to below 1 percent growth this year.
Inflation in the eurozone is predicted to remain above the European Central Bank’s medium-term target of 2 percent this year and next, with annual growth in prices now expected to come in at 5.6 percent this year before slowing down to 2.9 percent in 2024. That’s largely unchanged from May projections which put eurozone inflation at 5.8 percent this year and 2.8 percent in 2024.
