Economy is recovering, EU seeks to respond when Mr. Trump 'signals' tax imposition

Continued protectionist measures by trading partners could disrupt global trade, putting pressure on the EU's highly open economy.

Eurozone economy falls into technical recession (Source: Reuters)

The European Commission (EC) on November 15 forecast that the economic growth of the Eurozone will increase slightly from 0.8% in 2024 to 1.3% in 2025 and inflation will continue to decrease from 2.4% to 2.1%.

However, the EC also pointed to risks arising from geopolitical tensions, as well as weak investment and high living costs. Germany, the bloc's largest economy, is expected to remain sluggish.

The Eurozone economy is recovering steadily, with growth set to accelerate further next year, but there are still long-term structural challenges that need to be addressed amid the current geopolitical uncertainty, EC Vice President Valdis Dombrovskis said.

Both consumer demand and investment are expected to recover, the agency said. Consumption will continue to rise as purchasing power improves and interest rates fall. Investment is expected to increase on the back of stronger corporate balance sheets, better earnings and more favorable credit conditions.

Meanwhile, inflation in the Eurozone has fallen significantly over the past two years, after rising to 8.4% in 2022 due to the Russia-Ukraine conflict.

Along with that, the unemployment rate of the European Union (EU) fell to a record low of 5.9% in October 2024.

However, EU Economic Affairs Commissioner Paolo Gentiloni warned that there are still significant uncertainties due to geopolitical changes and falling consumer demand. Meanwhile, the outlook for trade is less optimistic, due to weak global demand for industrial goods in the coming years.

Mr Gentiloni also said that the German economy is forecast to shrink by 0.1% in 2024, after shrinking by 0.3% in 2023. However, the Eurozone's largest economy is expected to grow by 0.7% in 2025 and 1.3% in 2026.

The EC believes that continued protectionist measures by trading partners could disrupt global trade, putting pressure on the EU's highly open economy.

As US President-elect Donald Trump hints at tariffs on some imports from the EU and other parts of the world to protect US industry, Gentiloni called on member states to boost “competitiveness through investment and structural reforms”.

Source: https://baoquocte.vn/kinh-te-dang-phuc-hoi-eu-tim-cach-ung-pho-khi-ong-trump-danh-tieng-ap-thue-294020.html