The European Union started the year with significant growth and a decrease in inflation

By: Trademagazin Date: 2024. 05. 16. 13:39

According to the latest report of the European Commission, at the beginning of 2024, the economy of the European Union began to grow at a surprisingly fast pace, while inflation continued to decrease. After the stagnation in 2023, this is considered a positive turn. Based on the Commission’s forecast, the EU’s economic growth will accelerate to 1 percent this year and 1.6 percent next year, and the GDP growth rate in the euro zone will increase from 0.8 percent to 1.4 percent.

According to Eurostat’s quick estimate, GDP grew by 0.3 percent in the first quarter of this year in both the EU and the euro area, which may signal the end of economic stagnation since the end of 2022. The growth is mainly driven by private consumption, which is stimulated by the increase in real wages and employment, although the high propensity to save continues to curb consumption. A moderate growth in investments can be observed, especially in the housing construction sector.

In terms of inflation, the EU harmonized index of consumer prices (HICP) is expected to decrease from 6.4 percent in 2023 to 2.7 percent this year and 2.2 percent next year. A similar trend can be observed in the euro area, where inflation will decrease from 5.4 percent last year to 2.5 percent this year, and to 2.1 percent by 2025.