The European Commission's Autumn 2024 Economic Forecast projects moderate growth for the EU. GDP growth is estimated at 0.9% for 2024, rising to 1.5% in 2025 and 1.8% in 2026. However, the report highlights downside risks from the ongoing wars in Ukraine and the Middle East, high energy prices, and weakness in the manufacturing sector.
Inflation is expected to ease from 2.6% in 2024 to 2.4% (remaining above the European Central Bank's (ECB) target) and further to 2% in 2026. Following a May easing cycle, the ECB has cut interest rates three times, with rates projected to reach around 2% in 2025 and remain there in 2026.
Germany is forecast to see 0.7% growth in 2025 after two years of recession. France and Spain's growth prospects are higher than previously anticipated, while Italy's are revised downward.
Despite the forecast, significant downside risks remain, including the war in Ukraine, geopolitical instability, and protectionist measures from trading partners. Weak productivity growth is also hindering wage increases and complicating the fight against inflation.
Separately, sources speaking to SteelRadar indicate the European steel sector remains mired in a deep recession and faces significant uncertainty. While US political developments will play a role, high inventory levels, planning difficulties, and weak demand pose immediate and significant threats to the sector's sustainability, with 2025 expected to be particularly challenging. A substantial increase in demand is crucial for any long-term recovery.
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