Europe is facing deflation for all of 2015, according to forecasts just released by the European Commission.
The institution expects growth of 1.3% across the euro area this year, somewhat stronger than 2014’s 0.8%. However, it also expects that prices will drop 0.1% over the whole of 2015.
Here’s how that looks:
Here’s what they have got to say:
The pace of the recovery remains slow as Europe continues to struggle to leave the legacies of the crisis behind it. Economic growth remains also weighed down by unfinished macroeconomic adjustment and sluggish implementation of reforms, as well as long-standing weak growth trends…
New developments have occurred that are expected to brighten in the near term the EU’s economic outlook that would otherwise have deteriorated since the autumn. Oil prices have declined sharply, the euro has depreciated noticeably, the ECB has decided to expand the size and composition of its outright asset purchases by adding sovereign bond purchases, and the European Commission has presented its Investment Plan.
The recent steep fall in oil prices should provide a boost to EU GDP growth over the forecast horizon but will further depress headline inflation this year.
In short, still not great, but better than it looked three months ago.
For the big four economies, here’s how it breaks down for expected growth in 2015:
- France: 1%
- Italy: 0.6%
- Spain: 2.3%
- Germany: 1.5%
Nothing to write home about, but the EC expects no country to fall back into recession. Here are the inflation forecasts:
- France: 0%
- Italy: -0.3%
- Spain: -1%
- Germany: 0.1%