Europe optimistic about eurozone economies; Dutch growth at 0.9%, inflation falling

The European Commission has become less pessimistic about the economic outlook in the European Union this year than in the autumn. The executive body of the EU said it expects an average growth of 0.9 percent for the eurozone.

In November, there were growing fears about a recession as the year headed to a close, when growth averaged 0.3 percent. Inflation in the eurozone also seemed to have passed a high point. In 2023, this will drop to an average of 5.6 percent in the countries that use the euro, the Commission stated in its annual winter forecast.

The European Commission also estimated the Dutch growth rate at 0.9 percent for 2023, and it said the Commission expects the situation will improve to 1.3 percent in 2024. The Netherlands is continuing to suffer from a labor shortage and business investment is expected to remain weak. Inflation in the Netherlands should fall to 4.5 percent this year, and to 2.7 percent in 2024.

European confidence in the resilience of the European economy appears to be recovering, despite the uncertainty about the ongoing war in Ukraine, the Committee said. It also warned of “strong headwinds” in 2023. Consumers and businesses continue to face high energy bills. Even without including energy and food prices, the purchasing power of households will remain under pressure.

In the Netherlands, the loss of purchasing power will only be partially compensated by higher wages and government support measures, the Committee predicted. As a result, consumers will still be reluctant to spend more than is necessary.

The Committee estimated that the average growth rate in the eurozone countries for 2022 will be calculated at 3.5 percent. For the Netherlands, that should be 4.4 percent, after a “small contraction” in economic activity in the third quarter and expected stagnation in the fourth quarter.