Questions swirl about the strength of China’s recovery from Covid lockdowns, and there’s talk of recession in the United States. Yet Europe’s economic prospects have brightened in recent months, according to the European Commission. The EU’s executive arm on Monday upgraded its growth outlook for 2023 and 2024. It now expects the EU economy to expand 1% this year, up from an estimate of 0.8% in February. Growth next year is pegged at 1.7%, an upward revision of 0.1 percentage points.
“The key factors underpinning this forecast go in opposite directions: on the one hand, declining energy prices and a resilient labor market and, on the other hand, tightening financial conditions,” Paolo Gentiloni, the European Commission’s economy minister, said at a press conference. “Heightened risk perception” among banks after recent tumult in the sector is making it harder to access credit, while rising rates are eating into loan demand, Gentiloni noted.
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