The EU has nudged up its forecast for economic growth across the 19-country eurozone, despite a much gloomier outlook for Greece, which is struggling to get its hands on vital bailout cash it needs to pay off debts.
In its spring forecast published on Tuesday, the European Commission said it is predicting 1.5 percent growth for the eurozone this year, up 0.2 percentage points from the previous forecast in February.
For next year, the commission has kept its forecast of 1.9 percent for the eurozone.
Photo: Reuters
It said the eurozone as a whole is benefiting from a number of factors, including lower oil prices, a steady global outlook, a weaker euro, the 1.1 trillion euro (US$1.2 trillion) monetary stimulus from the European Central Bank (ECB) and less-stringent budget policies.
“The European economy is enjoying its brightest spring in several years, with the upturn supported by both external factors and policy measures that are beginning to bear fruit,” European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici said. “But more needs to be done to ensure this recovery is more than a seasonal phenomenon.”
The recovery is being powered by Germany, Europe’s biggest economy, which is expected to post solid growth of 1.9 percent this year, followed by 2 percent next.
Another standout is Spain, which is expected to grow by a healthy 2.8 percent this year and 2.6 percent the following year.
For some it was proof that a relaxation in the government belt-tightening measures that dominated EU policy for much of the financial crisis is starting to pay off.
“The recovery has arrived because Europe has taken a break from the policies of austerity,” the European Trade Union Confederation said in a statement. “Growth has finally been given a fighting chance.”
One country seemingly going the other way is Greece, which is struggling to agree to a package of economic reforms with European creditors to unlock bailout funds. Without the 7.2 billion euros, Greece could face bankruptcy and a potential exit from the euro.
The European Commission now anticipates 0.5 percent growth for Greece this year. That is a stunning 2 percentage points lower than the forecast made just three months ago. For next year, the commission anticipates Greek growth to accelerate to 2.9 percent.
Moscovici conceded that the forecast for Greece is subject “to a high degree of uncertainty” and is premised on a successful conclusion to the current discussions between the Greek government and creditors. The two sides have been locked in talks for months, but there are some hopes that the outlines of a deal may be agreed on Monday at a meeting of the eurozone’s 19 finance ministers in Brussels.
Moscovici said he hoped at least to see progress by then.
“That is the signal everyone is waiting for,” he said.
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