EU economy will grow gradually amid high geopolitical risks

Gentiloni: “We expect growth to accelerate gradually over this year and next year”

Paolo Gentiloni

The European Commission published EU economic development forecasts on May 15. For the next two years, “a gradual expansion of European economies in the face of high geopolitical risks” is predicted. According to European Commissioner Paolo Gentiloni, “the EU economy has recovered significantly in the first quarter of 2024, indicating that we have turned the page after a very difficult 2023. We expect growth to accelerate gradually this year and next year, as private consumption is supported by falling inflation, recovery in purchasing power, and continued job growth.”

According to Gentiloni, “the public deficit should gradually decrease after the removal of almost all energy support measures, but public debt will increase slightly next year, indicating the need to consolidate the budget while protecting investment.” As in all other areas, the outlook for the Twenty-Seven “remains subject to high uncertainty, and with two wars still raging close to home, the risks of deterioration have increased.”

In terms of concrete numbers, the European Commission reiterated its estimate for eurozone GDP growth in 2024 at 0.8%, following 0.4% growth last year. In 2025, eurozone GDP is expected to grow by 1.4%, down 0.1% from the previous forecast in February.

However, for the EU, growth should not exceed 1% in 2024, compared to the previously projected 0.9%. The EU economy is expected to grow by 1.6% in 2024, compared to 1.7% estimate in February.

The inflation rate in the eurozone is not expected to exceed 2.5% this year after rising 5.4% last year. Across the European Union, price growth will be slightly higher, at 2.7%, also slowing significantly after 6.4% in 2023. The European Commission estimates inflation fall in 2024 to 2.1% in the eurozone and 2.2% in the EU.