Tailwinds Support Brightest EU Spring Economic Forecast.

The European economy is enjoying its brightest spring in several years, benefitting from many supporting factors at once. Both external factors and policy measures that are beginning to bear fruit. Oil prices remain relatively low, global growth is steady, the euro has continued to depreciate, and economic policies in the EU are supportive. Positive economic tailwinds. According to the European Commission’s Spring 2015 Economic Forecast.

Domestic demand is the main contributor to GDP growth, with an acceleration of private consumption expected this year and a rebound of investment next year. As a result, real GDP in 2015 is now expected to rise by 1.8 % in the EU and by 1.5 % in the euro area, respectively 0.1 and 0.2 percentage points higher than projected three months ago. For 2016, the Commission forecasts growth of 2.1 % in the EU and of 1.9 % in the euro area.

On the monetary side, quantitative easing by the European Central Bank is having a significant impact on financial markets, contributing to lower interest rates and expectations of improving credit conditions. Risks to the inflation outlook have declined in response to the ECB’s quantitative easing and in response to the upward revisions to the growth outlook.

According to the European Commission’s Spring 2015 Economic Forecast GDP growth could turn out stronger than expected if tailwind factors last for longer or prove stronger than anticipated. GDP growth, however, could disappoint if geopolitical tensions rise, or if there is financial market stress, for instance as a result of the normalisation of monetary policy in the United States.

Spring 2015 Economic Forecast:

Only policies, up until 21 April 2015, that have been credibly announced and specified in adequate detail are incorporated and projections assume no policy changes.

Delivering on investment and reforms and sticking to responsible fiscal policies are key to obtaining the lasting jobs and growth Europe needs.

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