European Commission lowers 2023 economic growth forecast to 0.6% from 0.8% previously

In its quarterly assessment published on Wednesday, the European Commission cut its forecasts for the Eurozone’s economic growth for this year and the next, noting that the bloc could avert a technical recession.

Additional takeaways

2023 economic growth forecast lowered to 0.6% from 0.8% previously.

2024 economic growth forecast seen at 1.2%, then 1.6% in 2025.

Sees Q4 eurozone growth at 0.2% q/q after -0.1% in Q3, no technical recession.

2023 inflation forecast seen at 5.6%, then 3.2% in 2024, then 2.2% in 2025.

High inflation, interest rates, and weaker external demand took a heavier toll on growth than anticipated.

Expects aggregated Eurozone budget deficit to fall to -2.8% of GDP in 2024 from -3.2% in 2023, ease to -2.7% in 2025.

Forecasts Italy, France, Belgium, Slovakia and Malta to have a budget deficit well above EU limit of 3% in 2024 and 2025.

Expects aggregated Euro zone public debt to ease in 2024 to 89.7% of GDP from 90.4% in 2023, ease to 89.5% in 2025.

Forecasts Italian public debt, second highest in the EU, will rise to 140.6% of GDP in 2024 and 140.9% in 2025 from 139.8% in 2023.