The European Commission has lowered its 2025 forecast for economic growth in the eurozone to 1.3%.
According to an earlier forecast, growth was expected to be 1.4% in 2025 and 1.6% in 2026. The 2024 forecast of 0.8% remained unchanged. The European Commission expects overall inflation in the eurozone to more than halve in 2024: from 5.4% in 2023 to 2.4%, and then begin a gradual decline to 2.1% in 2025 and 1.9 % in 2026.
Budget deficit EU in 2024 is projected to contract by about 0.4 percentage points, to 3.1% of GDP, driven by windfalls and fiscal consolidation efforts.
In 2025, the deficit is projected to fall modestly to 3.0% as further fiscal constraints are offset by revenue shortfalls. In 2026, positive economic dynamics should further reduce the deficit to 2.9%.
In the eurozone, the deficit is projected to gradually fall from 3.0% of GDP in 2024 to 2.8% in 2026.
According to forecast of the European Commissionthe EU's economic outlook remains uncertain and risks are largely skewed to the downside. Geopolitical risks and the continued vulnerability of European energy security are fueled, in particular, by Russia's war against Ukraine and the escalation of conflict in the Middle East.
Further strengthening of protectionist measures by trading partners could put pressure on world trade, which would negatively affect the EU economy, the European Commission expects. On the domestic front, policy uncertainty and structural problems in the manufacturing sector could cause further losses in competitiveness and put pressure on growth and the labor market.
If US President-elect Donald Trump makes good on his promise to hit European imports with tariffs, Hungary will feel the impact “exponentially” due to its trade ties with Germany.
Europe continues to buy Russian gas worth billions of euros and even increases supplies, which is a sign that the continent still cannot live without Russian energy. notes “European truth”.
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