Brussels raises the growth forecast for the eurozone in 2022, foresees a greater slowdown in 2023

Brussels raises the growth forecast for the eurozone in 2022, foresees a greater slowdown in 2023

The eurozone economy will grow more than expected in 2022, according to forecasts from the European Commission on Friday, and will slow more than previously thought in 2023, but the slowdown will only slightly affect employment or public finances in the eurozone. .

In its regular economic forecasts for the 19 countries that share the euro, the Commission said it expected the economy to contract in the last quarter of this year and continue to contract in the first three months of 2023, mainly as a result of rising prices. of energy caused by the Russian invasion of Ukraine.

“We are approaching the end of a year in which Russia has once again cast the dark shadow of war over our continent,” said European Commissioner for Economy Paolo Gentiloni.

But apart from the expected two quarters of negative growth – a technical recession – the euro zone’s unemployment rate, aggregate deficit, and debt or current account balance will not deteriorate much, if at all, according to estimates. forecasts.

“The EU economy has shown great resilience to the shocks this has caused. However, rising energy prices and rampant inflation are taking their toll and we are facing a very difficult period both socially and economically” , said.

The Commission forecast that the euro zone economy will grow 3.2% this year, more than the 2.7% forecast in July, but then slow sharply to 0.3% growth next year, well below from the July forecast of 1.4%, before picking up 1.5% in 2024.

But the sharp slowdown will hardly affect employment: the Commission expects the unemployment rate to rise to 7.2% next year, from 6.8% this year, before falling back to 7.0% in 2024 .

Likewise, the euro zone’s aggregate budget deficit will barely widen, rising to 3.7% of GDP in 2023, from 3.5% seen this year, and falling back to 3.3% in 2024.

Public debt will continue to fall to reach 92.3% of GDP next year, from 93.6% this year, and reach 91.4% in 2024.

Inflation, while still high, will also slow to 6.1% in the euro zone in 2023, from 8.5% this year, and continue to decline to 2.6% in 2024, according to the Commission.

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