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European Economic Forecast Winter 2015
Pierre Moscovici Commissioner for Economic and Financial Affairs,
Taxation and Customs
5 February 2015
EU growth is gradually improving
2
GDP growth in the EU
85
90
95
100
105
-3
-2
-1
0
1
2
3
4
07 08 09 10 11 12 13 14 15 16
GDP growth rate (left scale)GDP (quarterly), index (right scale)GDP (annual), index (right scale)
forecast
quarter on quarter % change index, 2007=100
3.1 0.5
-4.4
1.7 -0.4
Figures above horizontal bars are annual growth rates.
2.00.0 1.3
1.72.1
Steep fall in oil pricesBrent oil spot prices (USD/€)
3
30
50
70
90
110
130
12 13 14 15
USD/bbl
EUR/bbl
price per bbl
Monetary policy has eased further
4
10-year government bond spreads
Long term inflation expectations
0
6
12
18
24
30
36
0
6
12
18
24
08 09 10 11 12 13 14 15
ES PT IE EL (right scale)
(level)
0
0.5
1
1.5
2
2.5
3
01/12 07/12 01/13 07/13 01/14 07/14 01/15
Inflation expectations 10 years forward 10 years ahead
Inflation expectations 3 years forward 3 years ahead
Inflation expectations 1 year forward 1 year ahead
Euro has depreciated against major peers
5
Euro exchange rates, USD and JPY
Real and nominal effective exchange rate
90
100
110
120
130
140
150
160
170
180
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
06 07 08 09 10 11 12 13 14 15
USD/EUR (left scale)JPY/EUR (right scale)(level) (level)
-6
-4
-2
0
2
4
6
8
LV LT EE FI SI LU AT
SK DE
BE
NL PT MT IT FR ES
EL CY IE
EA19
NEER
REER
%monthly averages (% change March - December 2014)
The fiscal stance in the EU is now neutral
6
Budgetary developments, EU
-7
-6
-5
-4
-3
-2
-1
0
1
2
-7
-6
-5
-4
-3
-2
-1
0
1
2
09 10 11 12 13 14 15 16
General goverment balance (left scale)Structural balance (right scale)
forecast
% of GDP % points
Upbeat signals on bank lending
Bank lending to households and non-financial corporations, euro area
Net changes in credit standards and credit demand, euro-area
7
-50-30-101030507090110
-100-80-60-40-20
0204060
06 07 08 09 10 11 12 13 14 15
Credit standards - past 3 months (left scale)Credit standards - next 3 months (left scale)Credit demand - past 3 months (right scale)Credit demand - next 3 months (right scale)
balance
tightening ↑
↓ easingbalance
decrease ↓ increase ↑
-10
-5
0
5
10
15
05 06 07 08 09 10 11 12 13 14
bank lending to NFCs
total NFC debt funding
GDP (nominal growthrate)
%
8
Growth in global GDP
Global growth is firming, but is uneven across regions
30
35
40
45
50
55
60
65
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
07 08 09 10 11 12 13 14
Emerging economies
Advanced economies
Global manufacturing andservices PMI (right scale)
% points index
Source: Global Insight, Markit Group Limited
EU growth is gradually improving
9
GDP growth in the EU
85
90
95
100
105
-3
-2
-1
0
1
2
3
4
07 08 09 10 11 12 13 14 15 16
GDP growth rate (left scale)GDP (quarterly), index (right scale)GDP (annual), index (right scale)
forecast
quarter on quarter % change index, 2007=100
3.1 0.5
-4.4
1.7 -0.4
Figures above horizontal bars are annual growth rates.
2.00.0 1.3
1.72.1
Investment growth is set to pick up
11
90
95
100
105
110
115
08 09 10 11 12 13 14 15 16
EA
EU
index, avg('00-'07) = 100
forecast
Total investment, EU and euro area
Unemployment is slowly declining
12
Employment growth and unemployment rate, EU
6
7
8
9
10
11
-0.8-0.6-0.4-0.20.00.20.40.60.81.0
07 08 09 10 11 12 13 14 15 16
Employment (quarter on quarter % change, leftscale), forecast (year on year % change, left scale)Unemployment rate (right scale)
% % of the labour
forecast
Forecast figures are annual data.
Significant differences in fiscal performance between countries
13
-15
-13
-11
-9
-7
-5
-3
-1
1
3
SI EL ES IE CY PT FR BE IT MT
SK LT FI NL
AT
LV EE
DE
LU
2013 2015
% of GDP -7
-6
-5
-4
-3
-2
-1
0UK HR PL HU RO SE CZ BG DK
2013 2015
% of GDPEA Non-EAGeneral government balance, EU
Risks to the growth outlook
14
Risks on the downside:• Geopolitical risks• Renewed financial market volatility• Delayed implementation of structural reforms• Long period of low inflation
Risks on the upside:• Faster than expected impact of policy measures• Further depreciation of the euro• Larger impact of low oil prices