The EU's economy entered 2024 with subdued momentum. The European Commission downgraded its growth forecast to 0.9% for the EU and 0.8% for the euro area. Yet while inflation rates are expected to decline more than previously predicted, challenges remain.
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00:00 Russia`s continued war in Ukraine is still affecting the EU`s economic growth, as is
00:07 the conflict in the Middle East. Disruptions in trade are also being felt due to the attacks
00:13 by Houthis on Western ships in the Red Sea. Climate risks and frequent extreme weather
00:20 also remains a threat.
00:24 Taking all factors into account, the European Commission has downgraded its winter economic
00:30 forecast published on Thursday.
00:33 Growth in the EU and the euro area is now estimated at 0.5 percent in '23, marginally
00:41 below our autumn projections. For '24, GDP growth is estimated at 0.9, which is 0.4 lower
00:54 than projected in autumn. In '25, the EU economy is forecast to expand by 1.7, unchanged from
01:02 the previous forecast. For the euro area, we project growth at 0.8 this year and 1.5
01:10 in '25.
01:13 A leading Bruegel Institute analyst in Brussels said the good news is that energy prices are
01:19 abating.
01:23 Since the European economy is a net importer of energy, it implies that it is very sensitive
01:31 and vulnerable also to possible energy price changes. But the good news is that all three
01:38 main types of energy, petroleum, gas and electricity, the prices went back to values well before
01:47 the start of the war. And also, forecast and market expectations suggest that these energy
01:54 prices will remain low.
01:57 The European Commission has also said that as inflation continues falling, real wages
02:03 will rise and with that, consumption will also increase. The forecast expects trade
02:09 with foreign partners to even out after last year's poor performance.
02:13 (whooshing)