The European Commission forecasts modest growth in Europe for this year and next -provided member countries carry through planned reforms.
The Commission's Spring Forecast, released Monday, pointed to a continuing increase in aggregate EU GDP during the next two years, provided agreed economic policy measures are carried out by member states. The European Union as a whole emerged from a nearly two-year recession in late 2013.
The Commission's economists project real GDP growth of 1.6% in the EU and 1.2% in the euro area in 2014, rising to 2.0% and 1.7% respectively in 2015.
Substantial differences remain between rates of GDP growth, unemployment, and investment in different EU member countries, with several countries still mired in recession as of Q4 2013.
Structural reforms seen as key to growth
Siim Kallas, EU Commission Vice-President, underlined the importance of structural reforms in the weaker countries. He said the example of eastern European economies in the 1990s "shows how important it is to embrace structural reforms early on and to stay the course, whatever challenges may be faced along the way."
Domestic EU demand is expected to become the key driver of growth over the forecast horizon. Consumer spending should progressively add to growth, as unemployment rates gradually decline and consumers' real incomes benefit from low inflation. Investment in equipment and construction is expected to grow. The contribution to demand of net exports is expected to diminish.
The slow pace of this upturn is in line with previous recoveries following deep financial crises.
nz/hg (dpa, European Commission)