Commission upgrades growth forecasts

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Commission upgrades growth forecasts

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The European Commission upgraded its growth forecasts for the EU and the eurozone on Tuesday, saying structural reforms are showing signs of repairing Europe’s economy.

The eurozone will grow by 1.2 percent this year, and 1.8 percent next year, the EU executive said in a statement.

Germany is predicted to grow by 1.8 percent this year and 2 percent next, while France’s economy will expand by 1.0 percent in 2014 and by 1.7 percent in 2015.

Guntram Wolff of the Brussels-based think-tank Bruegel said it was “a very shallow recovery.”

“We can’t say that we are out of the crisis. We are perhaps out of the immediate phase of the crisis the most financial tensions that we observed two years ago,” he told euronews.

“We still have very high debt levels, we still have very high unemployment levels and all these things have to be addressed.”

Inflation has been falling in recent months; a display of weak consumer demand, which in turn can lead to deflations when prices fall in real terms.

The European Central Bank’s target is 2 percent, but eurozone inflation is likely to get anywhere near that inside the next two years, according to the forecasts.

It will reach 1 percent in 2014, while climbing to 1.3 percent in 2015.

Oli Rehn, the EU economics commissioner, warned inflation remained a real risk to the eurozone.

“Inflation is low in the reforming vulnerable countries seeking to regain cost and price competitiveness but prolonged low inflation in the whole euro area would make it harder for them to achieve these objectives,” he said.

EU officials also predict that Greece will grow again after six years of recession, hitting 2.5 percent in 2015.