Europe’s battered economy in moderate recovery
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Moscovici said EU counties should continue to reform economies (Photo: European Commission)
By Eszter Zalan
The eurozone economy is set to continue its moderate recovery over the next two years, despite remaining concerns over the Greek bailout, upsets in the global economy and geopolitical tensions, the EU commission said in its autumn economic forecast on Thursday (5 November).
The single-currency bloc is set to grow 1.6 percent in 2015, thanks to low oil prices, a weaker euro and the European Central Bank’s stimulus policy.
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The 19-country zone is to continue to grow by 1.8 percent next year and by 1.9 percent by 2017, the forecast said, despite a slowdown in emerging markets hindering European exports.
The 28-member EU economy is projected to grow by 2.0 percent of GDP in 2016, and 2.1 in 2017.
Pierre Moscovici, the EU’s finance commissioner, told press the global economic outlook is uncertain and said EU countries should not let up in efforts to reform their economies.
After months of political crisis and tense negotiations over a new bailout programme, agreed in July, Greece’s economy will slip back into recession this year.
The forecast predicts its economy will shrink 1.4 percent this year and 1.3 percent next year, before returning to growth (by 1.3 percent) in 2017.
'We have rules'
Meanwhile, Europe’s fourth largest economy, Spain, will likely run a deficit higher than the 3 percent EU rules allow. It is forecast to hit 3.6 percent of GDP in 2016.
It needs to bring the deficit below the 3 percent bar next year, with the government aiming for 2.8 percent.
Just last month, Brussels ordered Madrid to revise its budget and bring deficit numbers closer to the 3 percent rule.
But Spain’s general election, slated for 20 December, could make it politically difficult to commit to harsh measures.
Another worry is Portugal, where a protracted political crisis after inconclusive elections in October could hinder its ability to present a budget to Brussels in time.
“We have rules, and we expect them to be respected,” Moscovici said.
France
France, Europe’s third largest economy, is also in trouble.
The Commission said its deficit is not expected to fall below 3 percent threshold in 2017, raising concerns, as it has repeatedly missed the target.
Negotiations will now start with member states on budgetary plans, and decisions on whether they are in breach of EU rules will be made before the end of the month.
Following that, the Eu Council will take a decision on what measures they should take, and if any member states should face a disciplinary monitoring process or fines.
