EU Commission lowers Eurozone GDP forecast amid recession risks

Dhwani Mehta FXStreet

In its quarterly assessment published on Monday, the European Commission downgraded its projections for the Eurozone’s economic growth for this year and the next, citing that the German economy has slipped into recession.

Additional takeaways

Sees Eurozone GDP growth at 0.8% in 2023, 1.3% in 2024, down from 1.1% and 1.6% respectively seen in May.

Expects German economy to shrink by 0.4% in 2023 against its May forecast of 0.2% growth, sees German 2024 growth at 1.1% vs. 1.4% forecast in May.

Expects France to grow 1.0% in 2023, faster than the 0.7% it forecast in May.

Expects Italy to grow 0.9% this year vs. 1.2% forecast in May.

Slashes Dutch growth forecast to 0.5% this year from 1.8% see in May, expects 1.0% in 2024 vs. 1.2% expected in May.

Sees Eurozone inflation at 5.6% in 2023 vs 5.8% forecast in May, expects 2.9% Eurozone inflation in 2024 vs. 2.8% forecast in May.

Market reaction

The quarterly forecasts fail to have any notable impact on the Euro, as EUR/USD continues to trade sideways around 1.0725, up 0.24% on the day.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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