Economy
EU Commission’s “Autumn forecasts” were presented in Brussels. There is light at the end of the tunnel of crisis, despite “challenges” and weaknesses in the productive and business systems. Surprisingly, the refugees could represent a small added value
Long faces seem a distant memory, and finally, after years of catastrophic – or nearly catastrophic – economic forecasts, European Economic and Financial Affairs Commissioner Pierre Moscovici, walked into the press office in Brussels with a knowing smile. In fact, he was about to announce what Europeans have been anticipating for too long. “We can confirm it. The European economy remains on recovery course”, he said during the presentation of the “Autumn Economic forecasts”, critical to assess the health conditions of the EU’s productive and financial systems, including “macro” data such as GDP, employment, inflation and public debt.
Three positive messages. The French Commissioner listed the figures, brightened up by occasional enthusiasm, without denying that “the recovery remains fragile” and exposed to internal and external risks. “There are three main messages. The first regards recovery, that will continue in 2016 and 2017; the second is improvement in the financial outlooks of Member States; the third is about “greater convergence” amid EU countries’ situations, “although it is not sufficient.” The Forecasts show that real GDP in the euro area is projected to grow by 1.6% in 2015 and to pick up to 1.8% in 2016 and 1.9% in 2017. However, greater growth is expected in EU-28: +1.9% in 2015, +2.0% next year, and +2.1% in 2017.
Employment: there is room for hope. Figures that workers and families are most concerned about:
“The unemployment rate is expected to decline gradually, but it remains too high and it varies greatly across Member States.” However, the negative trend is expected to reverse.”
In the euro area unemployment is forecast to fall to 10.6% next year and 10.3% in 2017 from 11.0% this year, while in the EU as a whole, the forecast shows a fall from 9.5% this year to 9.2% and 8.9% in 2016 and 2017 respectively. National unemployment in Germany is expected to remain steady at 5% over the three-year period; decreases are expected from 10.4% to 10.2% in 2017 in France and from 12.2 in 2015 to 11.6% in 2017 in Italy. Unemployment rates are expected to drop – albeit with figures over 22% – also in Spain and Greece.
Dark clouds on the horizon. What is Moscovici concerned about? There are several factors. First of all, the competitive advantage given by declining oil prices and a relatively weak external value of the euro, (which had favoured exports) is waning, in particular,
“new challenges are appearing, such as the slowdown in emerging market economies and global trade, and persisting geopolitical tensions.”
Moreover, China’s sharp slowdown coupled by half the planet’s destabilization by ISIS, could have serious repercussions on the EU’s productive and trading systems. According to the Forecasts, the pace of growth “is expected to resist the challenges backed by other factors”. In fact, the rebound of employment could stimulate the recovery of consumption. Moreover, the terms of credit are generally more favourable to business investment, the burden of public debt could gradually decrease and in the meantime other economic and social reforms undertaken by Member States could lead to additional virtuous effects.
“Fair winds”. Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, said: “Sustaining and strengthening the recovery requires taking advantage of these temporary tailwinds” to “pursue responsible public finances, boost investment and carry out structural reforms to enhance competitiveness.”
Migrants, added value. Finally, the Commission’s forecasts highlight a figure that will need to be addressed in detail at a later stage: “The arrival of asylum-seekers could determine an additional positive impact on growth”, owing to the fact that additional public expenditure increases GDP, while “an additional positive impact on growth is expected in the medium term from the increase in labour supply.” For the EU as a whole, the growth impact is small, but it can be more sizeable in Member Countries more exposed to the arrival of refugees.
