MNI BRIEF: EU Forecasts See Reduced Growth Momentum In 2023-24

The euro Area economy is expected to continue growing this year and next but at a “reduced momentum”, according to the EU Commission’s Summer Interim Forecast released Monday. Growth for the EA was revised down to 0.8% this year from 1.1% in the Spring Forecasts and down to 1.3% from 1.6%.

Inflation in the euro zone is revised down to 5.6% from 5.8% in the Spring and and the outlook for 2024 is edged up up to 2.9% from a previous 2.8%.

The Commission noted “subdued” economic activity in the first half of 2023 and said rising consumer prices are taking a heavier-than-expected toll on demand despite the drop in energy prices and strong jobs market. “Meanwhile, the sharp slowdown in the provision of bank credit to the economy shows that monetary policy tightening is working its way through the economy,” the Commission said.

The ECB will published their latest round of projections on Thursday, as the Governing Council gathers to decide the latest policy decison (MNI SOURCES: Hawks Aim For ECB Hike Before Data Ties Hands)