Commission confirms economic recovery in latest forecast
The European economy started to grow again in the second quarter of this year, after contracting in the first quarter, according to the Commission's Autumn European Economic Forecast, published on Tuesday (5 November).
The Commission estimates the annual basis of real GDP growth this year at 0.0% in the EU and -0.4% in the eurozone.
For 2014, the EU's executive expects the economic recovery to gradually gather pace with GDP growth at 1.4% in the EU and 1.1% in the euro area, while reaching 1.9% and 1.7% in 2015, respectively.
However, the eurozone economy is likely to expand slower than previously expected next year due to weaker private demand. Investment and inflation will also stay well below the central bank target over the next two years, the Commission said.
Nevertheless, the recession was firmly behind the eurozone from the second quarter of this year and, according to the Commission, the pace of recovery would slowly accelerate quarter-on-quarter.
"There are increasing signs that the European economy has reached a turning point," EU Economic and Monetary Affairs Commissioner Olli Rehn said in a statement.
"The fiscal consolidation and structural reforms undertaken in Europe have created the basis for recovery. But it is too early to declare victory: unemployment remains at unacceptably high levels. That’s why we must continue working to modernise the European economy, for sustainable growth and job creation," Rehn continued.
The Finish Commissioner added that it was "encouraging" that in vulnerable member states, such as Greece, Portugal, Spain and Italy, confidence had picked up in recent months, though recent reading in October has been disappointing.
For 2014, the Commission expects that Greece will return to growth, mainly led by a strong revival of tourism.
Spain and Italy still need large adjustments. Exports have begun to drive growth in Spain. Both countries have moved their current account into surplus.
As growth gradually picks up in Portugal next year, it will only be with a lag until this is reflected in a high rate of employment, Rehn said.
In reaction to the economic and financial crisis, economic surveillance of member states has been enhanced in several steps.
The new elements and annual schedule of surveillance also required an adaptation of the scope and frequency of European Economic Forecasts.
Under rules that took effect in autumn 2012, the Commission must provide three forecasts - the traditional spring and autumn editions and a winter forecast to be published in the beginning of February.
BusinessEurope's director general, Markus Beyrer, said in a statement that his organisation agrees with the overall picture painted by the Commission forecast that the European economy is starting to turn the corner.
"But growth of 1.4% for the EU is still far below the levels we should be attaining in order to raise living standards and make significant inroads into Europe’s unacceptably high levels of unemployment. We need to pick up the pace of structural reforms in labour and product markets as part of a broader strategy to give greater priority to economic competitiveness."