EU cuts eurozone inflation, growth forecasts for 2024

BRUSSELS, Feb 15 (AFP): The European Commission on Thursday cut both its growth and inflation forecasts for the eurozone in 2024, as it warned geopolitical tensions spelled rising uncertainty for the single-currency area's economy.

The forecasts by the EU's executive arm demonstrate the impact of the European Central Bank's interest rate-hiking campaign last year: a welcome fall in inflation, predicted to drop to 2.7 per cent, but also worryingly sluggish growth, expected to reach just 0.8 per cent.

Although the Frankfurt-based ECB has held rates steady so far in 2024, it is widely expected to begin cutting rates later this year in the face of slowing consumer prices and a weakening eurozone economy.

Inflation soared in the aftermath of Russia's invasion of Ukraine in 2022, sending energy prices sky-high as Europe scrambled to find alternative power sources.

Reflecting lower energy prices, the commission revised its inflation forecast sharply down from 3.2 per cent-although it still remains above the ECB's two-per cent target.

"Lower energy commodity prices and weaker economic momentum set inflation on a steeper downward path than anticipated in the Autumn Forecast," it said in a statement.

The commission's 2024 growth forecast for the eurozone, at 0.8 per cent.