According to E.U economists, the European Union can expect higher economic growth in 2015 due to relatively low oil prices and central bank policies.
The Euro-Zone economy is bogged down by several key factors – high unemployment rate, low investment spending and massive corporate and government loans which will most likely act as a ‘ceiling’ on the region’s economic growth.
The European Commission economists are predicting that the GDP of the Euro-Zone will increase at 1.5 % from their earlier prediction of 1.3 % in February. The growth forecast of European Union’s GDP is expected to be around 1.8 % which was around 1.7 % back in February. The increased German domestic consumption coupled with low interest rates and a booming employment sector is expected to drive the Gross Domestic Product of the nation to grow at 1.9 % which was 1.5 %, only a couple of months ago. Both Spain and Ireland are among the top countries that are expected to grow at the quickest rate, according to forecasts released on Tuesday, by the lead economists at the European Commission.
The Greek economy will continue to suffer in the coming months due to the disagreement between the government and its creditors. The growth prospect for the nation cash-strapped nation was cut from 2.5 % to 0.5 % in the last 2 months by the commission. “The current lack of clarity on the policy stance of the government vis-a-vis the country’s policy commitments in the context of the EU/IMF support arrangements worsens uncertainty further,” was the commission’s official comments on how Greece is not helping themselves to climb out of the economic hole that they dug themselves in. Recent comments from the IMF’s reluctance to extend deadline for Greece’s bailout fund added more fuel to the already ‘burning economy’.
The inflation in the Euro-Zone is expected to crawl up and be somewhere around the 0.1 % mark at the end of 2015 before spiking to 1.5 % in the next year. However the exceptionally high unemployment rate, which stands at 11 % at present, is expected to remain high in the foreseeable future as well. The commission expects it to fall by a mere 0.5 % in 2016.
Although the forecast for Europe is better than it was a couple months back, the key question that remains: can Europe’s economy sustain this growth rate over the next 3-5 years?
David Findley
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