The European Commission predicts that the European Union's economy will see slow but increasing economic growth this year and next year, according to a new forecast published on Wednesday.
At a press conference, economy commissioner Paolo Gentiloni said: "after a difficult 2023 - and indeed, we had a difficult year - economic activity rebounded in the first quarter of this year." A commission press release said growth in early 2024 "marks the end of the prolonged period of economic stagnation that started in the final quarter of 2022."
Nevertheless, while Wednesday's Spring Forecast paints a slightly rosier view of 2024 gross domestic product (GDP) growth in the bloc than the previous Winter Forecast published in February, it cuts the estimate for 2023 and its prediction for 2025.
The commission publishes such seasonal forecasts four times per year.
The latest forecast upgrades projected GDP growth in 2024 from 0.9% to 1%. It also cuts the estimate for 2023 from 0.5% to 0.4%, and the 2025 prediction from 1.7% to 1.6%.
Growth in 2023 was "particularly weak," Gentiloni said. "Despite robust employment and wage growth, labour incomes barely outpaced increased inflation." He added that households saved a larger share of their disposable income, rather than spending it.
The new figures also give a bleaker outlook for the 20 countries of the single-currency eurozone. The commission now expects GDP growth in those countries of 0.4% in 2023, down from 0.5% in the previous forecast; 0.8% in 2024, down from 0.9%; and 1.4% in 2025, down from 1.5%.
February's Winter Forecast had already downgraded many of the estimates from the previous Autumn forecast.
On the other hand, the commission now expects quarterly inflation to reach the European Central Bank's 2% target slightly earlier in 2025 than it predicted in its last forecast. Overall inflation for that entire year is forecast at 2.2%.
At the same time, nominal wage growth will slow but remain above inflation, Gentiloni said.
A nominal wage is the amount of money a worker gets paid in simple currency terms. By contrast, real wages measure how much people can buy with that money.
If nominal wages grow faster than inflation, real wages will rise. If not, real wages will fall, even if people are bringing home more money.
"By [20]25, average real wages are projected to have fully recovered their 2021 levels, though this is not the case for all member states," Gentiloni said. He explained that 2021 is a good comparison because it's when inflation started to rise, eating into real wages.
Unemployment is expected to remain fairly steady, at 6.1% in 2023 and 2024 and 6% in 2025.
