Eurozone, toward confirmation of 0.8 per cent growth in 2024

Brussels – Positive signals and uncertainties stemming from geopolitical tensions blowing “headwinds” to growth that EU Economy Commissioner Paolo Gentiloni expects to be “moderate” but still present for the eurozone. The autumn economic forecast will not be unveiled until November 15. Still, more than a month in advance, Gentiloni himself offers a preview, publicly confiding at the Eurogroup meeting in Luxembourg that “more or less we think that the previously anticipated 0.8 per cent growth will not be far from reality, despite the difficulties of some member states.”

It may not sound much, given that the Economy Commissioner offers no outlook whatsoever on 2025, but Gentiloni ventures, for 2024, a figure considered as well-established, confirming the one offered at the time of the economic forecast published in May. The reason for this “momentum” is justified by various elements. On the one hand, there are positive signs for the economy of the EU countries with the single currency, first and foremost, a drop in inflation, “for the first time in more than three years below the European Central Bank’s reference target,” meaning 2 per cent. It touched fell to 1.8 per cent in September, mainly due to much lower energy prices, and this is no doubt “good news,” Gentiloni said. Then there is the labour market, which “remains historically strong” and thus helps one look forward to the immediate future confidently.

Gentiloni, however, does not deny that risk factors remain, linked above all to geopolitical uncertainties, starting with the war in the Middle East, which “produces not only victims, tragedies and tensions but also headwinds for the economic situation, for what concerns trade, the trend of oil prices.” For the time being, the European Commission’s services note “limited impacts” on the crude oil price list, but that does not mean that the situation and the markets are observed with calm.

Therefore, the European Commission will likely prefer to maintain a cautious approach and publish conservative estimates regarding the development of the Gross Domestic Product of Europe and its member states. Gentiloni offers what he can, but the fact that there is some optimism about about the growth prospects for 2024 indicates some confidence. Also in the background remain the decisions that the ECB will be called upon to make on October 17: the choice of a possible further cut in the cost of money lent and thus a new downward adjustment of interest rates could help, and not a little, the EU executive in its forecasting exercise. Wars permitting, and provided that in the meantime, the Sino-European tensions triggered by the EU duties on Chinese electric cars do not escalate into a trade war.