The European Union has revised its economic growth forecast downward for this year and next due to the impact of inflation and higher interest rates. The European Commission predicts slower growth in the eurozone and the broader EU. Weak domestic demand and high consumer prices are hindering people’s willingness to spend. The European Central Bank faces a crucial decision on whether to continue raising rates to control inflation.
Germany, the largest eurozone economy, is expected to shrink this year due to factors such as higher energy prices and reduced demand from China. Although unemployment remains low and wages are gradually increasing, recession concerns persist. The European Central Bank’s decision on interest rates remains uncertain as economists predict a possible pause in rate hikes. The euro’s depreciation against the US dollar also poses challenges for the region.