MENA Newswire News Desk: The European Commission’s Autumn Forecast has projected modest GDP growth for the European Union (EU) in 2024, marking a gradual recovery after a period of economic stagnation. The EU’s GDP is expected to grow by 0.9%, while the euro area is forecast to see a slightly lower growth rate of 0.8%. Economic activity is anticipated to accelerate in subsequent years, with growth reaching 1.5% in the EU and 1.3% in the euro area by 2025, and further improving to 1.8% and 1.6%, respectively, in 2026.
Inflation across the euro area is projected to decline significantly, with headline inflation falling from 5.4% in 2023 to 2.4% in 2024. This trend is expected to continue, with inflation easing to 2.1% in 2025 and reaching 1.9% by 2026. In the broader EU, inflation is expected to decrease more sharply, from 6.4% in 2023 to 2.6% in 2024, before settling at 2.4% in 2025 and 2.0% in 2026.
Economic growth resumed in the first quarter of 2024 and maintained a steady, albeit subdued, pace through the second and third quarters. While employment growth and recovering real wages bolstered disposable incomes, consumer spending remained restrained. Elevated living costs, combined with heightened uncertainty from repeated economic shocks, prompted households to save a greater portion of their incomes, further impacted by high-interest rates incentivizing savings over spending.
Investment levels underperformed expectations, experiencing a widespread contraction across most EU Member States and asset categories during the first half of 2024. Despite the challenges, the Commission’s forecast underscores the EU’s gradual return to economic stability.
The report highlights key drivers for the region’s economic performance, including efforts to manage inflationary pressures and the challenges posed by subdued household consumption. While the forecast signals a positive trajectory, it also underscores persistent vulnerabilities that could affect the pace of recovery.