The European Commission lowered its forecast for eurozone GDP growth

The economy of 20 eurozone countries will grow by 0.6% by the end of 2023, and not by 0.8%, as expected in the summer, according to the latest economic report. forecast European Commission (EC).

“The European economy has lost momentum this year amid high living costs, weak external demand and monetary policy tightening. Although a gradual recovery in economic activity is expected in the future, the European Commission’s autumn forecast revises EU GDP growth downward,” says a commentary published on the EC website.

The forecast for GDP growth in EU countries is also 0.6%. The EC explained that the eurozone economy, after growing strongly for most of 2022, contracted towards the end of the year and barely grew in the first three quarters of 2023. Continued high inflation and monetary tightening caused more damage than expected, the EC acknowledged. Recent indicators and survey data point to a slowdown in economic activity in the fourth quarter amid increased uncertainty.

However, EC economists expect a gradual improvement in the situation. This will be facilitated by a further decline in inflation, a consistently active labor market and continued investment growth despite rising rates. Next year, the EC forecasts GDP growth in the eurozone by 1.2%, and in the EU by 1.3%. In 2025, the figure will increase by 1.6% and 1.7%, respectively. Inflation in the Eurozone will be 3.2% and 2.2% in 2024 and 2025, and in the EU – 3.5% and 2.4%.

Wherein forecast Russia’s GDP growth in 2023 was improved to 2%. Previously, the EC expected the Russian economy to decline by 0.9%. Russia has managed to redirect a significant share of its exports, in particular to India and China, but voluntary oil production cuts and difficulties in replacing lost European gas markets are expected to continue to limit export recovery in the second half of the year, the EC said.

Earlier, Eurostat reported that annual inflation in the eurozone, according to preliminary estimates, in October slowed down to the lowest since July 2021, 2.9% after 4.3% in September and 5.2% in August. Following the meeting on October 26, the European Central Bank (ECB) maintained all three types of interest rates, Vedomosti wrote: the rate on main financing operations remained at 4.5%, on deposits – 4%, the rate on margin loans – 4.75 %. The regulator’s decision coincided with market expectations.