The European Commission Lowered the Growth Forecast of the Eurozone Economy

According to the European Commission, the economy of the Eurozone economy will grow more slowly than expected this year and next year.

In its interim forecasts for GDP and inflation for the five largest euro area economies, the European Commission notes that euro area GDP will grow by 0.8% in 2023 and by 1.3% in 2024. According to the forecast made in May, 1.1% and 1.6% growth was assumed.

Eurozone Economy as per to European Commission:

“The weakness in domestic demand shows that high consumer prices for most goods and services, which are still rising, are causing more damage than expected in the spring forecast,” the European Commission said.

“This is despite declining energy prices and an extremely strong labor market, which has seen record low unemployment, continued employment expansion and wage growth,” the statement said.

The Commission forecasts consumer inflation in the euro area at 5.6% in 2023 and 2.9% in 2024, well above the European Central Bank’s target of 2.0%.

The economy of Germany, which is the largest economy in Europe, will decrease by 0.4% this year according to the forecast of the European Commission. In May, the European Commission assumed a decrease of 0.2%. Growth in Germany will also be lower next year – 1.1%, instead of the previously expected 1.4%.

We remind you that the level of unemployment in the countries of the Eurozone economy fell to a record low in June. Meanwhile, in July, the European Central Bank announced another interest rate hike as eurozone countries continue to struggle with inflation.