2023-11-18 02:00:00
Published on Nov 19, 2023 at 2:00 p.m.
Like every autumn, the European Commission has adjusted its economic forecasts. These are rather reassuring with, certainly, less growth than previously anticipated but also a continued slowdown in inflation. The latter thus returned to a two-year low in the euro zone. The decline should continue gradually.
Monetary tightening by the European Central Bank (ECB) has had a greater impact than expected. It is true that this was particularly severe and that it was accompanied by a hesitant external request.
The October indicators suggest that the fourth quarter will be further deteriorated, explains Brussels, the economic sluggishness being reinforced by the particularly gloomy geopolitical context.
Overall, the eurozone’s gross domestic product (GDP) will increase by 0.6% in 2023, 0.2 percentage points lower than this summer’s forecast. Growth will double in 2024, to a painful 1.2% (1.3% forecast this summer), thanks to a surge in consumption, supported by a resilient labor market and stimulated by wage gains and additional easing of inflation. Business investment, in good health, should continue. In 2025, expansion would stabilize at 1.6%, close to its potential.
Inflation in the euro zone would fall from 5.6% this year to 3.2% in 2024, then 2.2% in 2025, more or less the ECB’s target.
Public deficits, finally, are also generally in the process of normalization. It will reach 3.2% of GDP this year in the euro zone, rising to 2.8% in 2024. National disparities are strong. If in Germany the deficit will return to 1.6% of GDP in 2024 (-0.6 point), it will remain high in France at 4.4% of GDP (-0.4 point). The debt is higher on this side of the Rhine: 109.5%, compared to 63.6% of GDP only in Germany. The interest charge is therefore not the same!