According to its winter interim economic forecast, the EU beat expectations last year with the fastest growth in ten years.
The growth rate for both the euro area and the EU economy was estimated at 2.4% for 2017. This was higher than predicted in last November’s autumn economic forecast, which estimated 2.2% growth for the euro area and 2.3% for the EU. The most recent interim economic forecast has also raised its estimates for 2018 and 2019.
The expected rate of growth for 2018 has been raised from 2.1% to 2.3%, and for 2019 from 1.9% to 2.0%. The report credits strong cyclical momentum in the labour markets, and a stronger than expected rise in global economic activity and trade, for the growth exceeding expectations.
On the other hand, inflation is expected to remain subdued thanks to contained wage pressures and the slow reduction of labour market slack. Inflation in the euro area reached 1.5% in 2017, and is expected to remain at 1.5% for 2018, but rise to 1.6% in 2019.
How did the commission respond?
The commissioner for economic and financial affairs, Pierre Moscovici, welcomed the rapid growth reported in the interim economic forecast. He said: “Europe’s economy has entered 2018 in robust health. The euro area is enjoying growth rates not seen since before the financial crisis. Unemployment and deficits continue to fall and investment is at last rising in a meaningful way.”
Further, Moscovici emphasised that this growth could be more sustainable than ever before, if the EU introduces policies to effectively support it. He added: “Economic growth is also more balanced than it was a decade ago and – provided we pursue smart structural reforms and responsible fiscal policies – it can also be more durable.”
Beginning this year, the European Commission will publish an interim economic forecast in winter and summer, and a comprehensive economic forecast in spring and autumn, to replace the three annual comprehensive forecasts it was published since 2012.