EU cuts eurozone 2023 growth forecast

BRUSSELS, Sept 11 (AFP): The European Commission cut its 2023 and 2024 eurozone economic growth forecasts on Monday, with the single currency area weighed down by Germany's poor performance.
The EU's executive arm predicted the German economy would contract by 0.4 per cent in 2023, compared to a previous forecast of 0.2 per cent growth.
Germany faces recession in its vast industrial sector and a lacklustre performance in exports, both of which have significant impacts for the whole of the economy.
In its report, the commission pointed to manufacturing weakness and said Germany was "hit particularly hard" by energy price shocks linked to the war in Ukraine.
The European Central Bank's efforts to tame inflation via interest rate-hikes also contributed to the slowdown in the eurozone, the report added, days before the ECB meets to decided whether to raise borrowing costs again or pause its campaign.
The International Monetary Fund had already predicted Germany would be the only major advanced economy to shrink in 2023.
Growth in the eurozone and the European Union as a whole will continue but will be lower than predicted earlier this year.
In May, the commission said the eurozone would grow by 1.1 per cent in 2023 -- but revised that on Monday to 0.8 per cent.
"While we avoided a recession last winter, the multiple headwinds facing the EU economy this year have led to somewhat weaker growth momentum than we projected in the spring," the economy commissioner, Paolo Gentiloni, said during a press conference.
The commission in its report said there would be "slowing economic activity in the summer and months ahead, with continued weakness in industry and fading momentum in services, despite a strong tourism season in many parts of Europe".
Europe will also not be able to "count on strong support" from exports amid weak global growth and demand.
Gentiloni, however, sounded an optimistic note for improvement in Germany's economy.