The European Union (EU) increased its expectations for economic growth and inflation across the Eurozone. The EU Commission’s “European Economic Forecasts 2023 Spring” report has been published. In the report, it is predicted that the EU economy will grow by 1 percent in 2023, 1.7 percent in 2024, and the Eurozone economy will grow by 1.1 percent in 2023 and 1.6 percent in 2024. In the previous “Winter” report of the EU Commission, it was predicted that the EU would grow by 0.8 percent and the Eurozone by 0.9 percent in 2023. With the latest report, the growth expectations of the EU and Eurozone this year have been revised upwards by 0.2 percent.
Downside risks increase
The European Commission raised its inflation expectation for the Eurozone from 5.6 percent to 5.8 percent for 2023. The inflation forecast for the EU was increased from 6.4 percent to 6.7 percent in 2023. Thus, the EU Commission’s inflation expectations for the EU and the Euro Area were also revised upwards for this year. On the other hand, inflation is projected to be 3.1 percent in the EU and 2.8 percent in the Eurozone in 2024. Last year, the inflation rate was 9.2 percent in the EU and 8.4 percent in the Eurozone. In the report, Sweden will shrink by 0.5 percent and Estonia by 0.4 percent this year, Germany by 0.2 percent, France by 0.7 percent, Italy by 1.2 percent and Spain by 1 percent. While it is recorded that it will grow by 0.9 percent, inflation is predicted to be 6.8 percent in Germany, 5.5 percent in France, 6.1 percent in Italy and 4 percent in Spain this year. Noting that the downside risks to the economic outlook have increased, the report said, “More persistent core inflation may continue to limit the purchasing power of households.” expression was used. The report noted that the escalating period of financial stress could lead to risk aversion, which could significantly complicate lending standards. The report states that an expansionary fiscal policy stance could further increase inflation, adding, “Unrest in the banking sector or broader geopolitical tensions may present new challenges for the global economy.” evaluation was made. In the report, it was stated that positive developments in energy prices may lead to a faster decline in inflation and positive reflections on domestic demand, but the ongoing Russia-Ukraine war has revealed permanent uncertainties. In the report, it was predicted that the Turkish economy would grow by 3.5 percent in 2023, and by 4 percent in 2024, with inflation at 45 percent this year and 30.3 percent in 2024.
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