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Winter 2016 Economic Forecast: Weathering new challenges
Winter 2016 Economic Forecast: Weathering new challenges
The European economy is now entering its fourth year of recovery and growth continues at a moderate rate, driven mainly by consumption. The Commission's winter forecast, which was released on 4 February, shows that the overall growth outlook has changed little since the autumn but that the risk that growth could turn out worse than forecast has risen, mainly as a result of external factors. In the euro area, growth is projected to increase to 1.7% this year from 1.6% last year, and to climb to 1.9% in 2017. EU economic growth is forecast to remain stable at 1.9% this year and rise to 2.0% next year. Factors such as low oil prices, favourable financing conditions and the euro's low exchange rate are expected to be stronger and last longer than previously assumed. At the same time, risks to the economy are becoming more pronounced and new challenges are surfacing: slower growth in China and other emerging market economies, weak global trade as well as geopolitical and policy-related uncertainty.
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The European economy is successfully weathering new challenges this winter…Nonetheless, the weaker global environment poses a risk and means we must be doubly vigilant.
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Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs
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Investment Plan: deals signed in Hungary, Spain and Bulgaria
The European Investment Fund (EIF) and K&H Bank signed the first COSME agreement in Hungary on 4 February, with support from the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe. The EU support will allow K&H Bank to provide HUF 30 billion (approximately EUR 97 million) to over 1,500 small businesses in Hungary. Meanwhile, the EIF and Inveready Venture Finance, a venture debt fund managed by Inveready Technology Investment Group, signed an EFSI-backed guarantee agreement on 1 February that will allow Inveready Venture Finance to provide EUR 6.6 million of loans over two years to innovative SMEs and small mid-caps in Spain. In Bulgaria, the EIF and Raiffeisenbank (Bulgaria) EAD, a subsidiary of Raiffeisen Bank International AG, signed an EFSI-backed guarantee agreement that will allow Raiffeisenbank to provide EUR 35 million of loans to innovative SMEs in Bulgaria over the next 2 years. In related news, the European Investment Project Portal has in its pre-launch phase already begun helping match projects with investors, while the full version of the portal is being prepared to go live.
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Portugal post-programme surveillance: economy stable but held back by rigidities and macro-economic imbalances
Staff from the European Commission, in liaison with staff from the European Central Bank (ECB), visited Portugal from 25 January to 2 February to conduct the third post-programme surveillance (PPS) mission. Their visit also served as specific monitoring in the framework of the EU Macroeconomic Imbalance Procedure. Economic and financial conditions in Portugal have remained broadly stable since the conclusion of the second post-programme surveillance mission in June 2015. However, the economic recovery continues to be held back by macroeconomic imbalances and rigidities in labour and product markets. Reforms need to be stepped up to enhance medium-term growth prospects, job creation and competitiveness. Looking ahead, economic activity is expected to expand at a moderate pace driven by domestic demand, but held back by persistent deleveraging pressures in the private sector. Regarding Portugal's 2016 draft budgetary plan, the Commission on 5 February concluded that it is at risk of non-compliance with the rules of the Stability and Growth Pact and therefore invited the Portuguese authorities to take appropriate steps to ensure compliance.
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Real Economy episode explores benefits of a connected Digital Single Market
The latest episode of “Real Economy” examines the potential contribution to growth of the Digital Single Market (DSM) for consumers and businesses. The DSM could add EUR 415 billion to Europe’s growth, as well as hundreds of thousands of jobs by removing barriers and allowing the free movement of people, services and capital in the virtual world. European cross border digital sales are dismal, however; only 15% of Europeans make cross border purchases. Moreover, the European Commission estimates that the existence of different rules in every EU country costs an SME EUR 9000. Another issue is that almost half of Europeans lack digital skills, while 90% of jobs in the future will need them. Real Economy visited Estonia to see how to re-skill Europeans for the digital future. The programme also interviewed Andrus Ansip, European Commission Vice President for the Digital Single Market. Ansip acknowledged that some people will lose their jobs but said that overall “Progress will create more jobs than progress will destroy.” He added that Europe needs the DSM “to keep our smart brains here in Europe.” Real Economy explains the complexities of economic matters in the EU to Euronews' daily audience of 6.5 million viewers. Besides watching it on TV, viewers can also follow it online - live or on demand.
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Winter 2016 Economic Forecast: Weathering new challenges
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The European economy is now entering its fourth year of recovery and growth continues at a moderate rate, driven mainly by consumption. At the same time, much of the world economy is grappling with major challenges and risks to European growth are therefore increasing.
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Directorate-General for Economic and Financial Affairs
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