The European Commission has raised its euro zone economy growth forecast for this year to 2.5%. Its previous estimate – published in May – was 2.1%.
Economic and Monetary Affairs Commissioner Joaquin Almunia said this growth is not mostly dependent on exports, as has been the case in the past: “This acceleration of growth reflects a greater ability of the European economies, and in particular of the euro area economies, to rely on domestic demand, and an increased resilience of the European economies considering the increase we have had in oil prices.”
The improved forecast comes one day after the Organisation for Economic Cooperation and Development predicted growth of 2.7%.
But the Commission’s outlook varies greatly over the region’s four biggest economies from 3.5% in Spain to just 1.7% in Italy.
Almunia said next year’s growth forecast for the twelve countries in the euro zone may also have to revised upward but that will be carefully assessed.
He added that the main risk to growth next year was the possibility of further oil price increases and a slowdown in the United States, the world’s biggest economy.
The Commission also said that inflation will be higher than it thought in May ranging from 3.9% in Spain to 2% in Germany and France.
The commission’s outlook is in line with that of the ECB, which last week increased its projections for growth to 2.5% this year and 2.1% next year.