Brussels cuts EU growth forecast again to just 0.6% this year

Europe's economy will grow less than originally predicted, according to the European Commission's latest forecast.

Transcript

00:00 As a challenging year draws to a close, Europe`s economy lost momentum. On Wednesday, the European

00:06 Commission revised its GDP growth forecast for 2023 down compared to its previous summer

00:11 projections.

00:13 Brussels now estimates that the economy will grow by 0.6 percent in both the EU and the

00:18 Eurozone, 0.2 points lower than initially predicted. The reasons, the high cost of living,

00:25 weak external demand and multiple interest rate hikes this year.

00:29 And the EU`s economy commissioner Paolo Gentiloni is optimistic, particularly when it comes

00:33 to households.

00:35 Over the next two years, private consumption is set to be the key growth driver as wage

00:43 increases should outpace inflation, lifting households` purchasing power. A robust labor

00:51 market is also set to contribute. The recovery in private consumption could be even stronger

00:58 in the absence of the high savings rate expected to persist over the forecast horizon.

01:05 Tuesday`s forecast also contains some good news on the inflation front. Consumer prices

01:10 continue their downward trend. In October, they declined to 2.9 percent in the Euro area,

01:16 the lowest level in more than two years.

01:18 A year ago, inflation had seen a peak of more than 10 percent. While the decrease in the

01:24 past year was mainly driven by the sharp fall in energy prices, it`s now become broad-based

01:29 across all main consumption categories.

01:31 But what are the biggest obstacles to recovery going into 2024?

01:39 Those countries that are much more energy dependent, had been energy dependent on Russia

01:44 and actually have an economy that is very energy intensive are the ones that are bearing

01:49 the greatest cost. And here, really, I`m thinking about Germany. Germany really is the engine

01:54 of the European Union. And if Germany is not growing, then the rest of Europe will also

02:01 feel the impact of that.

02:03 For the first time, the commission`s autumn economic forecast covered Bosnia and Herzegovina,

02:07 Moldova and Ukraine, all of whom were granted EU candidate status last year. All three posted

02:13 promising numbers with the Ukrainian economy showing remarkable resilience in 2023.

02:20 (whooshing)