The EU Commission yesterday corrected its forecast on economic growth for the EU and the Eurozone. Whereas in autumn 2006 economic growth forecasts were 2.4% (EU) and 2.1% (Eurozone), the latest figures indicate 2.7% for the EU and 2.4% for the Eurozone. According to the Commission, the year 2006 was a remarkable one in which growth was mainly based on domestic demand which thanks to improvements on the labour market (3 million new jobs, 2 million of which in the Eurozone) considerably increased.
Thanks to this the EU economy was able to absorb energy prices which hit record highs in the summer of 2006 as well as stricter budget policies and a slowing down of the US economy. In the opinion of the Commission, these developments bode well for the year 2007. Higher energy prices in 2006 drove up consumer prices by 2.2% in both the EU and the Eurozone. Thanks to low oil prices and weaker than expected effects of the VAT increase on the German economy, in 2007 inflation is expected to decrease to 1.8% and 2.0% in the Eurozone and the EU respectively.
The latest forecast in English is available online.