The Commission’s new forecast for the EU economy points to lower growth rates than anticipated in 2023. Inflation will also speed up its current downward trend this year. In 2024, growth is now expected to reach 0.9% (from 1.3%) in the EU and 0.8% (from 1.2%) in the euro area. In the meantime, inflation in the EU should fall from 6.3% in 2023 to 3.0% in 2024, and then drop to 2.5% in 2025.
In 2023, growth was held back by a number of factors, since households had less to spend and interest rates were high. This year, however, economic activity in the EU is expected to gradually accelerate again. As inflation continues to drop, real wages will grow. In tandem with a resilient labour market, consumers are therefore expected to spend more. In addition, trade with foreign partners should normalise, after a very weak performance last year.
Inflation in 2023 dropped faster than expected, largely driven by falling energy prices. However, energy support measures across Member States will end soon. The current geopolitical tensions, notably in the Middle East, may also create trade disruptions. These two elements could still contribute to raising prices. But, overall, inflation will continue to ease, keeping rising food prices in check.
The Commission publishes four economic forecasts throughout a given year, covering GDP and inflation data for all Member States, the EU and the euro area.
