Winter 2017 economic forecasts | European Commission


The economies of all EU Member States are expected to grow in 2016, 2017 and 2018

After showing resilience in the face of global challenges last year, Europe’s economic recovery is expected to continue this year and next: for the first time in nearly a decade, the economies of all EU member states EU are expected to grow throughout the forecast period (2016, 2017 and 2018). However, the outlook is surrounded by greater uncertainty than usual.

Real GDP in the euro area has grown for 15 consecutive quarters, employment is growing at a steady pace and unemployment continues to fall, although it remains above pre-crisis levels. Private consumption remains the engine of the recovery. Investment growth continues but remains moderate.

In its winter forecast released today, the European Commission expects euro area GDP growth of 1.6% in 2017 and 1.8% in 2018. This figure is revised slightly upwards compared to the fall forecast (2017: 1.5%, 2018: 1.7%) due to better than expected performance in the second half of 2016 and a fairly robust start in 2017. GDP growth overall EU share is expected to follow a similar trend and is forecast at 1.8% this year and next (Autumn forecast: 2017: 1.6%, 2018: 1.8%

Global recovery expected to accelerate

Growth prospects for advanced non-EU economies have improved in recent months, in large part due to expectations of a fiscal stimulus in the United States, which have led to higher long-term interest rates and an appreciation of the US dollar. Growth in emerging market economies is also expected to strengthen through 2018, although to varying degrees across countries and regions. Overall, this could give a boost to European exports of goods and services after a weak 2016.

Inflation to resume

Inflation in the euro area has recently picked up, with past declines in energy prices recently giving way to an increase. After being very low for the past two years, inflation is now expected to reach higher levels this year and next, although below the “lower, but close to 2% medium-term” target. defined as price stability. Core inflation, which rules out volatility in energy and food prices, is only expected to rise gradually. Overall, inflation in the euro area is expected to drop from 0.2% in 2016 to 1.7% in 2017 and 1.4% in 2018. In the EU, inflation is expected to drop from 0.3% in 2016 at 1.8% in 2017 and 1.7% in 2018.

Domestic demand will remain the backbone of economic growth

Private consumption is expected to remain the main driver of growth, supported by sustained improvements in employment and increased nominal wage growth. However, with rising inflation and limiting household purchasing power growth this year and next, private consumption growth is expected to slow.

Investment is expected to continue to grow but moderately, supported by a number of factors such as very low financing costs and strengthening global activity. Projects funded under the Investment Plan for Europe are expected to increasingly support private and public investments as they move from approval to implementation. Overall, investment in the euro area is expected to grow by 2.9% this year and 3.4% in 2018 (2.9% and 3.1% in the EU), up 8. 2% since the start of the recovery in early 2013. However, the share of investment in GDP remains below its value at the turn of the century (20% in 2016 against 22% in 2000-2005). This persistent weakness in investment casts doubt on the sustainability of the recovery and the growth potential of the economy.

Continued job growth helps reduce unemployment

The economic recovery continues to have significant positive effects on labor markets, following extensive structural reforms in several Member States. Job growth is expected to remain relatively strong, although somewhat less dynamic in 2017 and 2018 than last year. The unemployment rate in the euro area is expected to decline further, from 10.0% in 2016 to 9.6% this year and to 9.1% in 2018. In the EU as a whole, unemployment is expected to fall by 8.5% in 2016 to 8.1% this year. year and 7.8% in 2018. These are the lowest unemployment figures since 2009, but still above pre-crisis levels.

Decrease in sovereign debt and public deficits

The aggregate euro area government deficit and the public debt to GDP ratio are expected to decline further in 2017 and 2018. The euro area government deficit is expected to drop from 1.7% of GDP last year to 1.4% in 2017 and 2018 This decrease reflects lower interest expenses due to exceptionally low interest rates. It also reflects further improvements in the labor market: more people pay taxes and contributions, and fewer receive social transfers. The debt-to-GDP ratio is expected to gradually decline from 91.5% in 2016 to 90.4% in 2017 and 89.2% in 2018.

The economies of all member states are growing

For the first time since 2008, the Commission’s forecast indicates economic growth in all EU Member States for the entire forecast period (2016, 2017, 2018). Even the Member States most affected during the recession are also expected to have returned to growth last year. The impact of the appreciation of the US dollar and the rise in long-term interest rates could, however, widen the growth rate differentials between member states.

Exceptional risks around the winter forecast

The particularly high uncertainty surrounding these winter forecasts is due to the yet-to-be-clarified intentions of the new US administration in key policy areas, as well as the many elections to be held in Europe this year and beyond. ” Article 50 negotiations “with the United Kingdom.

The balance of risks remains on the downside although both upside and downside risks have increased. In the short term, fiscal stimulus in the United States could have a bigger impact on growth than is currently expected. In the medium term, the risks to the growth outlook stem from the after-effects of recent crises; the United Kingdom’s vote to leave the European Union; potential trade disruptions; faster monetary tightening in the United States, which could have a negative influence on emerging market economies; and the potential consequences of high and growing debt in China.


This forecast is based on a set of external assumptions regarding exchange rates, interest rates and commodity prices with a cut-off date of February 1, 2017. The figures used reflect market expectations derived from the derivative markets at time of forecast. For all other incoming data, including assumptions about government policies, this forecast takes into account information up to February 1, 2017 inclusive. Only policies that are credibly announced and specified in sufficient detail are included. Projections assume that there is no change in policy.

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