Net exports are the main driver of economic activity, which is also supported by resilient private consumption. Inflation is estimated to have peaked at 8.1% in 2022 and is set to moderate gradually throughout 2023 to reach 2.6% in 2024. The budget surplus is projected to increase further in 2023 and 2024.
The European Commission estimates that the European economy continues to show resilience in a challenging global context. Lower energy prices, abating supply constraints and a strong labour market supported moderate growth in the first quarter of 2023, dispelling fears of a recession. This better-than-expected start to the year lifts the growth outlook for the EU economy to 1.0% in 2023 (0.8% in the Winter interim Forecast) and 1.7% in 2024 (1.6% in the winter). Upward revisions for the euro area are of a similar magnitude, with GDP growth now expected at 1.1% and 1.6% in 2023 and 2024 respectively. On the back of persisting core price pressures, inflation has also been revised upwards compared to the winter, to 5.8% in 2023 and 2.8% in 2024 in the euro area.
The EU economy is in better shape than we projected last autumn. We avoided a recession and are set for moderate growth this year and next. Yet risks are too plentiful for comfort: we must remain vigilant.
Paolo Gentiloni, Commissioner for Economy
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- Publication date
- 15 May 2023
- Author
- Representation in Ireland