Eurozone Economic Forecasts Improve
The European Commission through The Directorate General for Economic and Monetary Affairs has just published an updated economic forecast for the Eurozone as a whole as well as for the EU and the individual member states. These Real GDP, Inflation and Unemployment predictions are used for the basis of much of the EU’s economic policy work as well as being given due credence by the European Central Bank’s Governing Council.
The previous report was published in November 2013 and outlined a clear path to recovery for the EU member states. Today’s update, although somewhat mixed, generally is being considered as an upgrade of the economic outlook for Europe.
**The Real GDP forecast has been upgraded from 1.1% in 2014 and 1.7% in 2015, growth is now being predicted by the Commission to come in at 1.2% for 2014 and 1.8% for 2015.
**Inflation was previously forecast at 1.5% and 1.4% for 2014 and 2015 respectively, today this is being seen as more like 1.0% in 2014 and 1.3% in 2015.
**Finally, the Unemployment forecast for the Eurozone has been revised from 12.2% in 2014 and 11.8% in 2015 to a more appealing 12.0% and 11.7% for 2014 and 2015.
The European Central Bank operates in a more real time environment and considers fresher data at its regular policy meetings. That is not to cast any doubt on the accuracy of the Commissions report, rather it sets up a benchmark from which European monetary policy makers measure the pace of improvement (or deterioration) of fundamental economic conditions and can therefore act accordingly.
The Euro jumped over 70 points on the back of the positive German export numbers this morning, but slowly settled back into it’s mid 1.37 trading range against the US Dollar as the market absorbed figures. Publication of today’s key forecast has been well accepted by the markets as it provides a solid justification for a more valuable Euro.
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