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European economic growth prospects slightly brighter

Frankfurt – The European Union Enforcement Agency has revised up its economic growth forecasts, saying Europe has avoided a feared winter recession. energy crisis But he warned that persistently high inflation would likely continue to hurt the economy, robbing people of their ability to spend.

The European Commission said in its spring forecast on Monday that growth forecasts for the 20 countries using the euro currency improved to 1.1% this year, up from 0.9% in the previous forecast in February.

European Commission Executive Vice-President Valdis Dombrowskis said in a statement that the European economy “has held up surprisingly well in the face of Russian aggression against Ukraine”.

Europe faced the prospect of a winter energy catastrophe. Russia cut off most supplies of natural gas to the continent during the Ukrainian War. Prices soared to all-time highs The gas needed to heat homes, generate electricity and power factories is fueling painfully high consumer prices.

Insane scramble for new natural gas sources through supply of more expensive natural gas Liquefied gas comes by ship — With milder winters and lower usage Helped Europe get through the winter Unless there is a big energy crisis.

But Dombrovskis warned that “core inflation remains high and could erode people’s purchasing power, slow investment growth and hinder access to credit.”

What is not included in core inflation Volatile food and fuel prices And it’s considered a better measure of price pressures in the economy than the overall numbers. reached 7% annually in April.

The European economy suffers from soaring consumer prices and European Central Bank raises interest rates It is trying to bring inflation back to the bank’s target of 2%.

Rising borrowing costs for consumers and businesses have reduced the availability of loans for home purchases and business investments, reducing demand for loans.

A further challenge is Recent turmoil has mostly affected US banksthree financial institutions have failed in recent months.

European officials say their banks are not directly exposed to U.S. problems, but increased scrutiny of bank finances by regulators and shareholders could make banks even more reluctant to lend. .

Banks are the main source of funding for companies in Europe, as opposed to the United States, where the financial markets provide most of the credit.

The European Commission has raised its economic growth forecast for next year to 1.6% from 1.5% previously.

Copyright 2023 Associated Press. all rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

https://www.local10.com/business/2023/05/15/europes-outlook-for-economic-growth-brightens-a-little/ European economic growth prospects slightly brighter

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