BRUSSELS, May 15 (Xinhua) -- The European Union (EU) economy is rebounding in the first quarter of 2024, as inflation decreases and private consumption rises, announced Paolo Gentiloni, European Commissioner for Economy, here on Wednesday.
"The EU economy perked up markedly in the first quarter, indicating that we have turned a corner after a very challenging 2023," said Gentiloni while presenting the European Commission's Spring Economic Forecast.
"We expect a gradual acceleration in growth over the course of this year and next, as private consumption is supported by declining inflation, recovering purchasing power and continued employment growth," he added.
According to the Spring Economic Forecast, gross domestic product (GDP) growth should amount to 1 percent in the EU, and 0.8 percent in the eurozone in 2024. In 2025, the EU economy should grow by 1.6 percent, while the eurozone's economy should grow by 1.4 percent.
The first quarter of 2024, with its 0.3 percent economic growth in both the EU and the eurozone, marks the end of a prolonged period of economic stagnation that started in the last quarter of 2022, according to the European Commission.
The main driver of economic growth in the next two years will be private consumption, boosted by growing real wages, which in turn will increase households' real disposable incomes.
However, investment growth is slowed down by a negative trend in residential construction, as well as lower rate of interest rate cuts than previously expected. Exports should pick up but are set to be counter-balanced by imports to match growing domestic demand.
Meanwhile, inflation is projected to continue its downward trend. In the EU, it should fall from 6.4 percent in 2023 to 2.7 percent this year, to reach 2.2 percent in 2025.
In the eurozone, inflation is projected to reach 2.5 percent this year, and 2.1 percent next year.
Inflation peaked at 10.6 percent in October 2022 in the eurozone. In April this year, it reached a two-year low of 2.4 percent.
Disinflation in the eurozone is to be driven by non-energy goods and food. Energy inflation should rise a bit, while the decline in services inflation will happen only gradually, alongside moderation in wage pressures. Inflation in the EU should follow the same trend as in the eurozone, according to the Commission.
Risks to this forecast include the current conflicts in Ukraine and the Middle East, and persistent inflation in the United States, said the Commission. ■