The European Commission expects a few 3 million asylum seekers to arrive in the European Union by 2017, who would boost the EU’s economic output and even improve public finances in the longer-term if integrated into the workforce.
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Reacting to the report, EU Commissioner for Economic and Financial Affairs Pierre Moscovici said the recovery “remains on course”, but warned improvement is still unevenly spread across the euro area and major challenges remain going into next year.
– Euro-Zone headed for moderate recovery but headwinds persist. The general government deficit is forecast to fall to 0.4 percent of GDP in 2017.
The European Commission has cut its eurozone growth and inflation outlook for next year, citing lower oil prices, a weaker euro and challenging global outlook.
Greece, which received a new 86 billion euro, three-year bailout, is expected to see its economy shrink by 1.4 per cent this year and 1.3 per cent in 2016, before seeing growth of 2.7 per cent the next year.
Despite a slowdown in China and emerging markets hampering demand for eurozone exports to, the 19-country single currency area is set to grow by 1.8 percent in 2016 and 1.9 percent in 2017, it said in its autumn forecast.
Germany, the euro zone strongest economy, will continue to grow, although at a slower pace than previously predicted, while Italy will see a faster increase of its GDP this year and in 2016. “This is important, particularly against the backdrop of a slowing global economy, continuing tensions in our neighbourhood and the need to manage the refugee crisis decisively and collectively”. However, for 2016, the commission slightly trimmed its growth forecast – to 1.8 percent from a previous estimate of 1.9 percent.
As for the general government deficit, it is projected to decrease further to 1.7% of GDP, from 2.1% of GDP in 2014.
– Inflation outlook for 2016 lowered to +1.0%, from a prior+1.5%.
So far, euro area exports have largely been spared from the deterioration in global trade, mainly thanks to the euro’s past depreciation.
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“Current expenditure is expected to continue growing due also to the measures introduced with the 2016 Budget, among others, the upward adjustment of the minimum contributory pension and the partial funding of the cost of home care for elderly”. Growth in food prices is forecast to pick up in 2017, contributing to the acceleration of overall inflation. In regards to the refugee crisis, Brussels pointed it could have a “small” favorable impact on growth if adequately handled by member states over the short and medium term.
