European Commission cuts eurozone growth forecast in 2023

September 12, 2023 (Anatolia) The European Commission on Monday lowered its forecast for the growth of the euro zone economy this year, amid weakness shown by the German economy, Europe's largest economy.

The Commission said in a statement yesterday that its estimate for the growth of single currency economies is 0.8 percent this year, down from an estimate issued last May at 1.1 percent.

The downgrade to growth forecasts was not limited to this year, with the Commission saying its estimate for the region's growth in 2024 was 1.3 percent, down from May's estimate of 1.6 percent.
She attributed this decline in growth to the damage to the German economy this year, amid weak demand, a decline in industrial production and a slowdown in the growth of its exports.

The Commission expects Germany, Europe's largest economy, to contract by 0.4 percent in 2023, compared with a previous forecast of 0.2 percent growth.

"For Germany... It shows us that the economy there has been negatively affected by the energy crisis resulting from the Russian-Ukrainian war. Energy prices have risen sharply."

In July, the International Monetary Fund's World Economic Outlook reported that the German economy could contract this year.

Inflation expectations in the euro area have also been revised, expecting them to remain well above the target of 5.6 percent in 2023, lower than the previous forecast of 5.8 percent.