The European Union’s economy is expected to struggle in 2024 as other global areas enjoy substantial growth, newly published research by the Organisation for Economic Co-operation and Development (OECD) has predicted.
According to the body’s latest Interim Economic Outlook published on February 5, the likes of India, China and the US are all expected to expand economically over the next two years.
By contrast, numerous Eurozone countries are set for a tough time, with the bloc’s core only likely to see growth of 0.6 per cent this year.
That appears to be largely down the EU’s larger economies struggling – Germany in particular, where the forecast growth rate outlook for 2024 has been slashed.
The OECD predicted in November the country would see just 0.6 per cent growth this year but has now revised that figure down to 0.3 per cent.
Things are looking very different for the US, according to the economist group. The OECD’s chief economist, Clare Lombardelli, described the country’s economy as showing “remarkable strength”.
“We are seeing a mixed picture around the world,” she said.
“The European economies are a bit weaker because of the tightening of monetary conditions in particular weighing on activity,” Lombardelli told Bloomberg on February 5.
“The growth position in Europe is weaker. We have seen stronger growth in the US. And the European economy has taken a much bigger hit on inflation because of their exposure to the energy price.”
The Eurozone economy stagnated last year, underperforming the rest of the world as former powerhouse Germany struggled with an industrial malaise that has no end in sight. https://t.co/JGk5Py5qLA
— Brussels Signal (@brusselssignal) January 30, 2024
Lombardelli added that the EU’s “ageing workforce” has also made the bloc’s economy weaker, especially compared to America, which has a much younger population overall.
Others have focused on different factors for this predicted weakening of European growth.
Key to the bloc’s poorer performance overall appears to be Germany, with the country’s export-based economy leaving it exposed to worldwide inflation and weaker growth during the COVID pandemic, experts said.
In a press release on February 5, the country’s ifo Institute noted that a lack of orders from abroad had left many German companies in a difficult position.
“Hardly an industry has been spared,” group official Klaus Wohlrabe said, noting that the order books for many enterprises were now “shrinking”.
That, combined with the ongoing energy crisis in the country caused by a mix of green policy and the Ukraine war, has led to a collapse in growth for the country, leaving many companies now struggling to survive, he said.
Given the current situation and outlook, some economists fear that a European recession may be on the cards over the coming months.
Germany’s already bleak economy looks set to contract further through 2024, economists have told Brussels Signal. https://t.co/09nfFDjJYI
— Brussels Signal (@brusselssignal) January 15, 2024