European Commission’s winter forecast for the EU economy, released on February 5, predicted economic growth in all of the bloc’s 28 member states, but said that improved outlook remained tempered by a weak investment environment and high unemployment.
The latest figures revised the estimated economic growth at 1.7 per cent in the EU as a whole in 2015, while the euro area is expected to grow by 1.3 per cent.
Economic and monetary affairs commissioner Pierre Moscovici said that the improved outlook was helped by “a welcome shot in the arm” in the shape of falling oil prices and the cheaper euro, while the 315 billion euro investment plan proposed by EC president Jean-Claude Juncker and the European Central Bank’s 1.1 trillion euro quantitative easing bond-buying programme would “help create a more supportive backdrop for reforms and smart fiscal policies.”
But he also warned that there was “much hard work ahead to deliver the jobs that remain elusive for millions of Europeans”, while European commissioner for the euro Valdis Dombrovskis said that “we have to step up the reform momentum to strengthen the recovery and make sure it translates into money in people’s pockets.”
In Bulgaria’s case, the Commission re-iterated its earlier view that the country’s growth outlook remained “subdued”, but increased its overall growth estimates to 1.4 per cent in 2014 and 0.8 per cent this year (both figures are 0.2 percentage points higher than in the previous forecast issued in November 2014).
Private consumption growth would slow down in 2015 after showing signs of recovery last year – lower fuel costs and stabilising labour market conditions would play a positive role, but fiscal tightening was “likely to dampen the outlook for consumer spending in 2015”, the EC said in its country forecast.
Investment in 2014 was “driven exclusively by public investment, with the government increasing its use of available EU funds”, but the end of the EU programming period meant companies were likely to freeze or postpone investment plans, the Commission said.
Bulgaria recorded the highest deflation in the EU in 2014, at 1.6 per cent – using the harmonised consumer price index (CPI) calculated for comparison with the rest of the EU. Part of the deflationary pressure came from country-specific factors, which will have less of an impact in 2015, but lower fuel prices will keep inflation largely negative in 2015, with the harmonised CPI this year expected to record 0.4 per cent deflation.
(Photo: Clive Leviev-Sawyer)