European Commission lowers growth outlook and says economy has lost momentum during a difficult year
The European Union’s executive commission has lowered its growth forecast for this year and next, saying the economy “has lost momentum” in 2023 as inflation weights on consumer spending and higher central bank interest rates deter borrowing for purchases and investment
FRANKFURT, Germany (AP) — The European Union's executive commission lowered its growth forecast for this year and next, saying the economy “has lost momentum” in 2023 as inflation weighs on consumer spending and higher central bank interest rates deter borrowing for purchases and investment.
The outlook for this year was lowered to 0.6% from 0.8% for the 20 countries that use the euro currency, and to 1.2% from 1.3% for next year, the commission said Wednesday in its autumn economic forecast, which revised figures from its previous forecast in September.
Even that modest growth outlook is exposed to risk from Russia's ongoing war against Ukraine and the Israel-Hamas war in Gaza. So far, the conflict has not interfered with oil supplies from Mideast producers such as Saudi Arabia and the United Arab Emirates, “but there is a risk of disruptions to energy supplies that could potentially have a significant impact” on prices and global growth.
While growth remains weak, unemployment remains near record lows and growth should improve as inflation falls and leaves people with more spending more, the commission said. Meanwhile, government deficits and debt have declined after a burst of stimulus spending during the COVID-19 pandemic.
