Reducing growth expectations in the European Union
Brussels on May 19 / WAM / The European Commission sharply reduced its expectations for the European Union’s GDP on Monday, warning that increasing commercial tensions and geopolitical certainty may have further damage to the economy of the already weak mass.
The European Commission expects in its new indicators now that the GDP of the European Union will grow only 1.1 % this year, a decrease in expansion of 1.5 % expected in November. The expected product of the euro area consisting of 20 countries has also been reduced from 1.3 % to 0.9 %.
The reduction is often due to the sharp decline in the growth expectations of Germany, the largest economy in the European Union, whose industries are highly exported to global trade tensions.
The German economy is now expected to freeze this year, much less than 0.7 % expansion expectations in November. The expected growth rates of France and Italy, the second and third largest economies in the European Union, reduced from 0.8 % to 0.6 % and 1 % to 0.7 %, respectively.
Meanwhile, increasing private consumption and “enhancing” investment in increasing the expected growth rate in Spain, the fourth largest economy in the European Union, has caused 0.3 percentage points to 2.6 %.
“The European Union feels pressure,” said Martin Veroy, Director General of Economic and Financial Affairs of the Commission.
Feroy added that the slowdown in global growth “will inevitably lead to the disability of” industries directed to export in the European Union, noting that “deteriorating morale” between citizens and companies also hinders consumption and investment throughout the bloc.
Monday’s expectations come in the wake of the repeated European Commission’s discounts for growth expectations in Europe over the past two years, as the weak demand, lack of investment and increasing competition from China have been a greater impact on the bloc’s economy.
The European Commissioner for Economics, Valdes Dombrovscis, indicated on Monday that the “risks” on the economic expectations of the European Union “still tend to the declining side.”
However, he said that the European Union showed “elasticity among high trade tensions and increased global uncertainty”, noting an expected rise in real wages and slowdown.
The Commission said that the total inflation in the eurozone is expected to decrease from 2.4 % last year to 2.1 % in 2025 – the same rate expected in November and only marginally higher than the target rate of the European Central Bank of 2 %.
The inflation forecast for 2026 has also been reduced from 1.9 % to 1.7 %, as the euro increase reduces the price of imports.
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