LOC17:04
14:04 GMT
BRUSSELS, May 19 (KUNA) -- The European Commission has revised its growth forecast for the Eurozone, in 2025 down to 0.9 percent from a previous forecast of 1.3 percent, citing a weaker global trade prospect and rising uncertainty by recent US tariffs.
In its Spring 2025 Economic Forecast report, released on Monday, the Commission noted that these revision reflects the impact of the reciprocal trade tension between the US and China on tariffs, as well as broader uncertainty that has affected the EU trade and investments.
The report also projected Eurozone inflation to fall more quickly than previously expected, reaching the European Central Bank's two percent target by mid-2025 and average 1.7 percent in 2026.
For the EU overall, inflation is forecast to decline from 2.4 percent in 2024 to 1.9 percent by 2026, aided by falling energy prices
The EU economy grew by 0.4 percent in the last 2024 quarter bringing an annual growth rate to one percent, supported by the increasing public spending and employment in government sector, along with higher household incomes and easing inflations.
However, the first quarter of 2025, growth slowed to 0.4 percent, constrained by weak investment in equipment and housing, as well as ongoing uncertainty and high financing costs.
Given the outlook for slower global growth outside the EU, projected at 3.2 percent in both 2025 and 2026 as well as declining energy and commodity prices, EU exports are expected to grow by 0.7 percent this year, rising to 2.1 percent in 2026.
The Commission attributed this sluggish export to "lower global demand, competitiveness losses, and uncertainty among European firms about expanding into new markets."
The report cited other factors, including lower energy prices, greater competition in non-energy industrial goods due to trade frictions, and the appreciation of the euro.
While the EU economy faces clear challenges from global uncertainty and slowing demand, the Commission noted signs of a gradual recovery are emerging, supported by resilient domestic consumption and a steadily improving labor market. (end)
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