The short-term outlook for the economy of the EU and the eurozone remains fragile. But GDP growth is expected to gradually return in 2013, with further strengthening in 2014.
On 7 November, the Commission published its autumn economic forecast for the eurozone and the European Union as a whole. The forecast covers indicators including gross domestic product (GDP), inflation, employment and public finances for 2012-14.
The consequences of the financial crisis continue to weigh on the growth and employment performance of the EU and eurozone, but economic growth is expected to gradually return starting in early 2013.
Gross domestic product
Real GDP is set to contract by 0.3% in the EU and by 0.4% in the eurozone in 2012. However, strong policy actions to contain the crisis and measures to improve the functioning of Economic and Monetary Union have helped stabilise the EU economy.
In 2013, a gradual return to growth is expected: GDP is projected to increase by 0.4% in the EU and by 0.1% in the eurozone, although large divergences across member countries will remain. However, competitiveness that had been lost in some EU countries is being gradually restored.
Together with structural reforms, this will pave the way for a stronger and more evenly distributed economic expansion in 2014, when GDP is expected to grow by 1.6% in the EU and by 1.4% in the eurozone.
Given the weakened economic activity, in 2012 unemployment is expected to reach 10.5% in the EU and 11.3% in the eurozone. It is expected to peak at 10.9% in the EU and 11.8% in the eurozone in 2013 before falling back slightly in 2014.
Olli Rehn, EU Commissioner for Economic and Monetary Affairs:
“Our projections point to a gradual improvement in Europe's growth outlook from early next year. Major policy decisions have laid the foundations for a strengthening in confidence. Market stress has been reduced, but there is no room for complacency. Europe must continue to combine sound fiscal policies with structural reforms to create the conditions for sustainable growth to bring unemployment down from its current unacceptably high levels.”
Inflation is estimated to decrease to 2.0% in the EU and 1.8% in the euro area in 2013.