BRUSSELS: The European Union (EU) upgraded its economic forecasts on Tuesday, betting that a modest recovery is now sustainable as member states push ahead with reforms.
The 18-nation eurozone should grow 1.2 percent this year and 1.8 percent in 2015, up from previous estimates given in November for 1.1 percent and 1.7 percent, the European Commission said.
Similarly, the full 28-member EU will expand 1.5 percent this year and 2.0 percent in 2015, also both revised up by 0.1 percentage point.
“Recovery is gaining ground in Europe…. Rebalancing of the European economy has been progressing and external competitiveness is improving,” EU Economic Affairs Commissioner Olli Rehn said.
“The worst of the crisis may now be behind us, but this is not an invitation to be complacent as the recovery is still modest,” he said.
“To make the recovery stronger and create more jobs, we need to stay the course of economic reform,” Rehn added.
Among member states, European powerhouse Germany should post growth of 1.8 percent this year, rising to 2.0 percent in 2015, slightly better than November’s estimates, while struggling France will pick up slightly to 1.0 percent but is flat at 1.7 percent for next year.
Twice-bailed out Greece is expected to escape six years in deep recession with growth of 0.6 percent and then 2.9 percent, while Italy will expand 0.6 percent and 1.2 percent as Spain does better with 1.0 percent and 1.7 percent.
Non-euro Britain, however, easily out-distances its eurozone peers with gains of 2.5 percent and 2.4 percent this year and next.
The eurozone escaped a record 18-month recession in the second quarter 2013 and after “three consecutive quarters of subdued recovery, the outlook is for a moderate step-up in economic growth,” the Commission said in its Winter forecasts report.
But growth depends on continued commitment to economic reforms and sound fiscal policy.
The “largest downside risk… is a renewed loss of confidence that could stem from a stalling of reforms at national or European level,” the Commission said.