Economic forecasts autumn 2006

Economic growth in 2006 is set to reach 2.8% in the European Union and 2.6% in the euro area, up from 1.7% and 1.4% in 2005, according to the Commission’s autumn economic forecasts. The main impulses are robust growth in domestic demand, especially investment, and sustained global growth. The economic activity should ease somewhat in 2007 and 2008 reflecting the global outlook and, in particular, the slowdown in the United States. Yet, GDP growth is projected to remain around potential in the next two years (EU: 2.4% in both 2007 and 2008; euro area: 2.1% in 2007 and 2.2% in 2008).

The EU as a whole is expected to create 7 million new jobs over the period 2006-2008 (5 million in the euro area). This will help increase the employment rate from 63?% in 2005 to 65?% in 2008 while reducing unemployment from a peak of more than 9% of the labour force in 2004 to 7.3% in 2008 in the EU (7.4% in the euro area). Inflation is also forecast to gradually decline to below the ECB's 2% inflation threshold in the euro area in 2008.

European Commission: DG Economic and Financial Affairs: Publications: European Economy: Latest macro-economic forecast http://ec.europa.eu/economy_finance/publications/european_economy/forecasts_en.htm

BBC News, 6.11.06: Eurozone economy gathering pace http://news.bbc.co.uk/1/hi/business/6120972.stm

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