European Commission boosts Eurozone GDP forecasts for 2023 and 2024

European Commission released a new set of economic projections for the Eurozone today. EC boosted 2023 and 2024 GDP forecast slightly while also raising inflation expectations in both years. It was explained that upward revision to inflation forecasts was because of persisting upward core price pressures. While GDP forecasts were increased, it was also noted that downside risks to the economic outlook increase.

2023 projections

• GDP: 1.1% vs 0.9% previously
• Inflation: 5.8% vs 5.6% previously
• Core inflation: 6.1%
• Unemployment rate: 6.8%
• Budget deficit: 3.2% (3.6% in 2022)

2024 projections

• GDP: 1.6% vs 1.5% previously
• Inflation: 2.8% vs 2.5% previously
• Core inflation: 3.2%
• Unemployment rate: 6.7%
• Budget deficit: 2.4%

Overall, changes to the forecasts were minor and so was the reaction of the market. EUR ticked higher in the first minutes following the release and so has German DE30. Nevertheless, scale of move on EURUSD or DE30 did not exceed 0.1%.