The European Commission Tuesday raised its economic growth forecast slightly for both the eurozone and the EU in 2011, but said inflation rate in the two blocs would be higher than the November forecast.
According to the interim economic forecast, eurozone economy will grow 1.6% and the EU will expand 1.8% in 2011, both 0.1% point higher than estimated in the autumn forecast. Inflation outlook for the currency bloc has lifted to 2.2% from 1.8% owing to higher energy and commodity prices. EU27 economy is predicted to grow 1.8%, faster than the 1.7% expansion seen in November. Inflation would be at 2.5%.
The report, however, pointed out that growth will be uneven across the member countries, while noting that the outlook in countries like France, Germany, Italy, the Netherlands, Poland, Spain and the UK have boosted the projections. These countries together account for as much as 80% of the European Union GDP. The Commission said the overall economic outlook for the region has not returned to normalcy despite the recent relative calm in the financial markets. The report also underlined the need for structural reforms and fiscal prudence. “Ensuring a stronger recovery calls for an agreement on an ambitious agenda of fiscal consolidation and structural reforms”, it said.