Finland Times

 

The European Union on Thursday predicted its economic recovery would continue at a "modest pace" both in the 19-country eurozone and across the continent.

 

     Euro area real gross domestic product (GDP) was forecast to grow by 1.6 percent in 2015, rising to 1.8 percent in 2016 and 1.9 percent in 2017, said the bloc's autumn economic forecast published by its executive arm the European Commission.

 

     In the wider EU, real GDP was also predicted to rise from 1.9 percent this year to 2.0 percent in 2016 and 2.1 percent in 2017.

 

     "The European economy remains on recovery course," said EU Commissioner Pierre Moscovici at a press conference, adding that the recovery "although subdued compared to past experiences," has so far proven resilient.

 

     In the first half of this year, the continent's GDP grew slightly faster than expected thanks to low oil prices, a relatively low euro exchange rate and easy financing conditions, said the forecast.

 

     Looking ahead, the EU said its economic growth, although slow, will be backed by factors such as better employment performance, easier credit conditions, progress in financial deleveraging and higher investment.

 

     With ongoing labor market reforms, the euro area is expected to see a growth in employment by 0.9 percent this year and next, and to pick up to 1 percent in 2017.

 

     In the EU, employment is set to increase by 1.0 percent this year and 0.9 percent in 2016 and 2017.

 

     The fiscal outlook was predicted to continue to improve: in 2015, the aggregate deficit-to-GDP ratio of the euro area is expected to fall to 2.0 percent. By 2017, the reading should fall to 1.5 percent, the zone's debt-to-GDP ratio is forecast to fall from its peak of 94.5 percent in 2014 to reach 91.3 percent in 2017.

 

     In 28-country EU, the deficit-to-GDP ratio is forecast to decline to 1.6 percent in 2017 from a forecast of 2.5 percent this year, while its debt-to-GDP ratio is expected to fall to 85.8 percent in 2017 from 87.8 percent expected this year.

 

     However, the EU also cautioned that its recovery was set to face some new challenges posed by the slowdown in emerging market economies and global trade, and persisting geopolitical tensions.

 

     "Risks related to the global economic outlook have increased. Lower growth in emerging market, the effects of expected normalization of U.S. monetary policy on emerging markets, could have a more negative impact on investment and economic activity in Europe than currently expected," the forecast said.

 

     The current massive refugee influx arriving in the continent was also viewed as having some "positive economic impact" as the migrants will emerge as supplement to local labor markets and help to promote consumption, according to Moscovici.