A new forecast made by the European Commision says that EU economy will grow and inflation decline further

The European Commission has released a new economic forecast for the EU, painting a more optimistic picture for consumers.

Following a period of economic contraction in 2023, inflation rates are projected to continue declining, and the EU economy is expected to gradually expand in 2024. This upturn is primarily attributed to increased consumer spending, driven by higher wages and improved job prospects.

Specifically, the forecast indicates a 1.0% growth for the EU economy in 2024, with the euro area economy expected to grow by 0.8%. Looking ahead to 2025, GDP growth is anticipated to further increase. Meanwhile, EU inflation has seen a significant decrease since its peak in 2022, with projections indicating a decrease to 2.7% in 2024 and further down to 2.2% in 2025.

The job market is also showing resilience, with the EU economy generating over 2 million jobs in 2023 despite the economic slowdown. Activity and employment rates among individuals aged 20-64 reached new highs in the last quarter of the year. As of March 2024, the EU’s unemployment rate hit a record low of 6.0%.

However, certain challenges persist. For instance, investment growth is decelerating due to a decline in new home construction, which impacts various industries. Consequently, it is expected that interest rates will decrease at a slower pace than previously anticipated.

The European Commission regularly publishes four economic forecasts annually, encompassing GDP and inflation data for all Member States, as well as for the EU and the euro area as a whole.