The European Commission warns that adverse conditions “persist”, but the EU will avoid recession and grow by 0.9% in 2023
With one year to go since the start of the war in Ukraine, the European economy shows slight signs of improvement: the EU will “narrowly” avoid technical recession and will grow by 0.9% this year. The European Commission’s Winter Economic Forecasts anticipate 2023 with a slight economic expansion, although they point out that “severe adversities” still persist, including inflation -which has accumulated three months of declines, but is still skyrocketing- and energy costs -which will contain consumption and economic activity-. In this context, the Spanish economy will grow by 1.4% this year, four tenths more than what was estimated in November, and will climb to 2% in 2024.
“The Spanish economy behaved relatively well in 2022, when it grew by 5.5%, one point more than expected,” said the Commissioner for the Economy, Paolo Gentiloni, on Monday. Brussels expects Spain to continue this positive trend this year, thanks to the boost in tourism, “a key sector” for its economic activity.
Community data also improves compared to the forecasts that Brussels published in the autumn, when it anticipated a “technical recession” in the block. According to their latest estimates, the EU and the Eurozone will “narrowly avoid” recession and will grow by 0.8 and 0.9% in 2023, respectively. In addition, the institution points out that the three consecutive months of lower inflation “suggest” that prices reached their “peak” in October, when the rate shot up to 10.6%. The latest data, that of January, places prices at 8.5% and Brussels expects them to continue to fall to 6.4% throughout the year and be reduced to 2.8% in 2024.
In the first half of 2022, the European economy grew “robustly”, before slowing down in the third quarter. The annual growth rate stood at 3.5% in the EU and the euro zone and Brussels sees signs that invite optimism this year: the diversification of energy supply and the “fall in consumption” have allowed the capacity of the gas reserves, which has contained the price of energy. The labor market remains strong, with the unemployment rate at its record low (6.1%). Confidence is gradually improving and economic activity is expected to continue expanding in the first quarter of the year.
The estimates are “better than expected, which does not mean that they are good,” Gentiloni stressed. The commissioner has advocated prudence and has valued the European policies put in place to deal with the pandemic and the Russian invasion. “In the future we must show the same resolve and ambition that we have shown up to now, with common responses to the adversities we face,” he added.
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