This document summarizes the European Economic Forecast for winter 2015. It finds that growth in the EU is gradually improving, with GDP growth expected to be 1.3% in 2015. Investment growth is also set to pick up. However, unemployment remains high at around 10% and there are still significant differences in fiscal performance between countries. Risks to the growth outlook include potential geopolitical risks and delays in structural reforms, but upside potential also exists if policy measures are more effective than expected.

1. European Economic Forecast
Winter 2015
Pierre Moscovici
Commissioner for Economic and Financial Affairs,
Taxation and Customs
5 February 2015

2. EU growth is gradually improving
2
GDP growth in the EU
85
90
95
100
105
-3
-2
-1
0
1
2
3
4
07 08 09 10 11 12 13 14 15 16
GDP growth rate (left scale)
GDP (quarterly), index (right scale)
GDP (annual), index (right scale)
forecast
quarter on quarter % change index, 2007=100
3.1 0.5
-4.4
1.7 -0.4
Figures above horizontal bars are annual growth rates.
2.0
0.0
1.3
1.7
2.1

3. Steep fall in oil prices
Brent oil spot prices (USD/€)
3
30
50
70
90
110
130
12 13 14 15
USD/bbl
EUR/bbl
price per bbl

4. Monetary policy has eased further
4
10-year government bond
spreads
Long term inflation
expectations
0
6
12
18
24
30
36
0
6
12
18
24
08 09 10 11 12 13 14 15
ES PT IE EL (right scale)
(level)
0
0.5
1
1.5
2
2.5
3
01/12 07/12 01/13 07/13 01/14 07/14 01/15
Inflation expectations 10 years forward 10 years ahead
Inflation expectations 3 years forward 3 years ahead
Inflation expectations 1 year forward 1 year ahead

5. Euro has depreciated against major peers
5
Euro exchange rates, USD
and JPY
Real and nominal effective
exchange rate
90
100
110
120
130
140
150
160
170
180
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
06 07 08 09 10 11 12 13 14 15
USD/EUR (left scale)
JPY/EUR (right scale)(level) (level)
-6
-4
-2
0
2
4
6
8
LV
LT
EE
FI
SI
LU
AT
SK
DE
BE
NL
PT
MT
IT
FR
ES
EL
CY
IE
EA19
NEER
REER
%
monthly averages (% change March - December 2014)

6. The fiscal stance in the EU is now neutral
6
Budgetary developments, EU
-7
-6
-5
-4
-3
-2
-1
0
1
2
-7
-6
-5
-4
-3
-2
-1
0
1
2
09 10 11 12 13 14 15 16
General goverment balance (left scale)
Structural balance (right scale)
forecast
% of GDP % points

7. Upbeat signals on bank lending
Bank lending to households and non-
financial corporations, euro area
Net changes in credit standards and
credit demand, euro-area
7
-50
-30
-10
10
30
50
70
90
110
-100
-80
-60
-40
-20
0
20
40
60
06 07 08 09 10 11 12 13 14 15
Credit standards - past 3 months (left scale)
Credit standards - next 3 months (left scale)
Credit demand - past 3 months (right scale)
Credit demand - next 3 months (right scale)
balance
tightening ↑
↓ easing
balance
decrease ↓ increase ↑
-10
-5
0
5
10
15
05 06 07 08 09 10 11 12 13 14
bank lending to NFCs
total NFC debt funding
GDP (nominal growth
rate)
%

8. 8
Growth in global GDP
Global growth is firming,
but is uneven across regions
30
35
40
45
50
55
60
65
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
07 08 09 10 11 12 13 14
Emerging economies
Advanced economies
Global manufacturing and
services PMI (right scale)
% points index
Source: Global Insight, Markit Group Limited

9. EU growth is gradually improving
9
GDP growth in the EU
85
90
95
100
105
-3
-2
-1
0
1
2
3
4
07 08 09 10 11 12 13 14 15 16
GDP growth rate (left scale)
GDP (quarterly), index (right scale)
GDP (annual), index (right scale)
forecast
quarter on quarter % change index, 2007=100
3.1 0.5
-4.4
1.7 -0.4
Figures above horizontal bars are annual growth rates.
2.0
0.0
1.3
1.7
2.1

10. All EU economies set to grow in 2015
10

11. Investment growth is set to pick up
11
90
95
100
105
110
115
08 09 10 11 12 13 14 15 16
EA
EU
index, avg('00-'07) = 100
forecast
Total investment, EU and euro area

12. Unemployment is slowly declining
12
Employment growth and unemployment rate, EU
6
7
8
9
10
11
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
07 08 09 10 11 12 13 14 15 16
Employment (quarter on quarter % change, left
scale), forecast (year on year % change, left scale)
Unemployment rate (right scale)
% % of the labour
forecast
Forecast figures are annual data.

13. Significant differences in fiscal
performance between countries
13
-15
-13
-11
-9
-7
-5
-3
-1
1
3
SI
EL
ES
IE
CY
PT
FR
BE
IT
MT
SK
LT
FI
NL
AT
LV
EE
DE
LU
2013 2015
% of GDP -7
-6
-5
-4
-3
-2
-1
0
UK HR PL HU RO SE CZ BG DK
2013 2015
% of GDPEA Non-EA
General government balance, EU

14. Risks to the growth outlook
14
Risks on the downside:
• Geopolitical risks
• Renewed financial market volatility
• Delayed implementation of structural reforms
• Long period of low inflation
Risks on the upside:
• Faster than expected impact of policy measures
• Further depreciation of the euro
• Larger impact of low oil prices

15. EU growth map 2015
15

16. European Economic Forecast
Winter 2015
Pierre Moscovici
Commissioner for Economic and Financial Affairs,
Taxation and Customs
5 February 2015