Press conference by Olli Rehn on the winter economic forecasts for 2012-2014
On 22 February 2013, Olli Rehn, Vice-President of the EC in charge of Economic and Monetary Affairs and the Euro, presented the European Economic Winter forecast 2012-2014.
While financial market conditions in the EU have improved substantially since the summer of 2012, economic activity was disappointing in the second half of 2012. However, leading indicators suggest that GDP in the EU is now bottoming out and we expect economic activity to gradually accelerate. The pick-up in growth will initially be driven by increasing external demand. Domestic investment and consumption are projected to recover later in 2013, and by 2014 domestic demand is expected to take over as the main driver of strengthening GDP growth.
The weakness of economic activity towards the end of 2012 implies a low starting point for 2013. Combined with a more gradual return of growth than earlier expected, this leads to a projection of low annual GDP growth in 2013 of 0.1% in the EU and a contraction of -0.3% in the euro area. Quarterly GDP developments are somewhat more dynamic than the annual figures suggest, and GDP in the fourth quarter of 2013 is forecast to be 1.0% above the level reached in the last quarter of 2012 in the EU, and 0.7% in the euro area.
The contrast between the improved financial market situation and the muted macroeconomic prospects for 2013 is to a large extent due to the balance-sheet adjustment process, which continues to weigh on short-term growth. As this process advances, it will also strengthen the basis for growth in 2014, which is projected at 1.6% in the EU and 1.4% in the euro area. PHOTOLINK