The document summarizes European Commission economic forecasts for the EU and Eurozone economies in 2023 and 2024. It finds that: 1) Growth in the EU and Eurozone will slow to 0.8% in 2023 before a slight acceleration to 1.4% in 2024, as high inflation and tighter financial conditions weigh on demand. 2) Inflation in the EU is forecast to decline to 6.5% in 2023 from its 2022 peak, and further decrease to 3.2% in 2024, assuming commodity prices and imported inflation continue to moderate. 3) Risks to the outlook include the ongoing war in Ukraine, geopolitical tensions, high core inflation persistence

1. 131.9
260.3
100.7
42.8
108.9 81.8
54.4
140.2
81.2
Natural gas (€/Mwh) Electricity (€/Mwh) Oil ($/ barrel)
2022 2023* 2024*
0.8
1.4
0.7
2.9
9.2
6.5
3.2
0
2
4
6
8
10
2014-18 2019 2020 2021 2022 2023* 2024*
Eurozone EU
European Commission economic forecasts
ECONOMY
In data
Loss of dynamism in European growth
Source: Círculo de Empresarios based on European
Commission, 2023.
* Forecasts
GDP GROWTH
SPAIN 2023*
2.2%
y-o-y, +0.3 tenths
r/ May.23 forecast
2024*: 1.9%
3 MONTH EURIBOR
2023*
3.4%
+3.1% r/2022
3.6% in 2024*
GLOBAL CONTEXT OF HIGH UNCERTAINTY AND TIGHTER FINANCIAL CONDITIONS IN WHICH THE EUROPEAN COMMISSION REVISES
DOWNWARD EU AND EUROZONE GROWTH FOR 2023 AND 2024
Containment of inflation
INFLATIONARY PRESSURES MODERATE DUE TO THE FALL IN COMMODITY PRICES, MAINLY ENERGY, AND THE WEAKENING OF GLOBAL
DEMAND FOR GOODS
Sources of uncertainty
• Continuity of the Russia-Ukraine war
• Geopolitical and economic tensions
• Synchronized tightening of monetary policies
• Persistently high core inflation levels
• Climate risks
GDP GROWTH
EU 2023*
0.8%
y-o-y, same as Eurozone
and -2.4 pp r/ world
1.4% in 2024* (1,3% in Eurozone)
INFLATION
EU 2023*
6.5%
y-o-y (5.6% in Eurozone)
3.2% in 2024*, +3 tenths r/ Eurozone
In Europe, weakness in industry and loss of
momentum in the services sector
PMIs: < 50 = contraction; > 50 = expansion
3.4
0.8
1.4
3.3
0.8
1.3
3.2
3.2 3.2
2022 2023* 2024*
EU
Eurozone
World (exc. EU)
European growth 2.4 pp below global growth in
2023*, with slight acceleration in 2024*
% y-o-y change
EU average 3.4 0.8
1.4
Eurozone average 3.3 0.8
1.3
After being the European economy that fell the most in
2020, Spain will grow by 2.2% y-o-y in 2023*, 3 tenths of
a percentage point more than estimated in May 23
% y-o-y change
Global growth driven mainly by
the US, while China slows down
43.5
47.9
42
44
46
48
50
52
54
56
58
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Manufacturing
Services
Eurozone
H2 23* → growth moderation due to …
• Loss of momentum in the tourism sector
• Weakening of economic activity in main trading partners
• Tighter financing conditions impact on aggregate demand
• Weaker labour market dynamics
2023* → annual inflation ▼ to 3.6% due to lower energy prices since Q3 22
Gradual ▼ in core inflation
• Delay in pass-through of energy price increases to other items, especially
food and services (H1 23)
Limited effects of 2nd round on wages, despite moderate rebound in nominal
and real terms observed in H1 23
3.8
3.0 3.0
2.3 2.0
-11.3
5.5 5.5
2.2 1.9
2015 2016 2017 2018 2019 2020 2021 2022 2023* 2024*
Changes in inventories
Investment
Private consumption
Public consumption
Net exports
Real GDP (% y-o-y change)
GDP % y-o-y change and contributions to growth in pp
Although ...
• ▲ household purchasing power due to ▼ price pressures and ▲ nominal wages
• ▼ financial risks due to private sector leverage and banking sector resilience
• Investment support with RRP
Negative contribution of energy prices that are
significantly reduced in 2023
Sources of crude oil price volatility:
• Uncertainty over supply from Russia, Saudi Arabia and OPEC+
• Recovery in China and corresponding oil demand
Favorable inflation performance due to monetary
tightening and lower commodity prices
HCPI % y-o-y change
After strong price increases in 2022, the Netherlands and
Spain are expected to experience further moderation in
inflation
HCPI % y-o-y change
2024* →▼ to 2.9% despite upward pressure from measures to mitigate
impact of high energy prices