Europe's Economic Rebound: Modest Growth Amidst Global Challenges

Europe's economy is emerging from stagnation with expected modest growth as consumer purchasing power gradually recovers. However, it faces threats from potential US protectionist policies. The European Commission forecasts growth for eurozone countries while Germany battles continued economic contraction amidst inflation easing.

The European economy is moving past stagnation but is projected to experience only moderate growth in the upcoming months as consumer purchasing power begins to recover from inflation losses, according to the EU's executive commission.

The commission cautioned that the economy remains vulnerable to protectionist policies from major trading partners. Notably, US President-elect Donald Trump's potential tariffs on foreign goods pose significant challenges. Economic Commissioner Paolo Gentiloni stressed the detrimental effect of such protectionism, emphasizing the EU's commitment to defend open trade while seeking cooperation with the new US administration.

Despite these challenges, eurozone countries are anticipated to see growth of 0.8% this year and 1.3% next year. The resurgence began earlier as new wage agreements partially revived household finances. Consumption is expected to rise as wages' purchasing power improves and interest rates decrease. Meanwhile, inflation next year is forecast at 2.1%, offering relief from the October 2022 peak.

(With inputs from agencies.)