01.03.2011 - The recovery is gaining ground
The Commission published its latest interim economic forecast on 1 March 2011. The updated projections include France, Germany, Italy, the Netherlands, Poland, Spain and the United Kingdom. The seven countries concerned represent 79% of EU and almost 83% of euro area GDP.
According to this latest update of GDP and inflation variables the EU recovery is expected to gain further ground in 2011 and to become more balanced towards domestic demand.
Based on an update for the seven largest EU Member States, growth prospects for this year have been revised slightly upwards in this interim forecast. For 2011 as a whole, GDP growth is now projected at 1.8% in the EU and 1.6% in the euro area, both 0.1 pp. higher than expected in the autumn forecast.
Energy and commodity prices have surged in the last few months, leading to an uptick in headline HICP inflation. The inflation forecasts for 2011 are thus revised up, with HICP inflation now projected at 2.5% and 2.2% in the EU and the euro area respectively. Nevertheless, the remaining economic slack, subdued wage growth and overall well-anchored inflation expectations should keep underlying inflationary pressures in check, with inflation expected to end the year at close to 2% in both regions
Amid still high uncertainty, risks to the EU growth outlook at the current juncture appear broadly balanced for 2011. Risks to inflation seem somewhat tilted to the upside, on account of ongoing geopolitical tensions in the Middle East and North Africa region.
The Commission usually publishes economic forecasts four times a year - comprehensive spring and autumn forecasts and smaller interim forecasts in February and September. The Commission's interim forecast is based on updated projections for France, Germany, Italy, the Netherlands, Poland, Spain and the UK.
The next fully fledged forecast is due on 13 May 2011.