The European Commission said earlier this month that the European economy expanded during the second quarter, showing signs that the economic recovery will continue.
Annual GDP is expected to remain unchanged in the EU and to fall by 0.4 percent in the eurozone, though growth is expected to increase to 1.4 percent in the EU and 1.1 percent in the eurozone next year—domestic demand is expected to drive the growth increases.
“There are increasing signs that the European economy has reached a turning point,” Olli Rehn, the vice president for economic and monetary affairs and the euro at the European Commission, said. “The fiscal consolidation and structural reforms undertaken in Europe have created the basis for recovery. But it is too early to declare victory: unemployment remains at unacceptably high levels. That’s why we must continue working to modernize the European economy, for sustainable growth and job creation.”
Unemployment has remained high in some countries, and employment has continued to fall. The labor market, however, has seen some improvements in recent months. The EC said it expects a modest decline in unemployment to 10.7 percent in the EU and 11.8 percent in the eurozone by 2015.
Inflation in the eurozone is expected to hold steady at 1.5 percent this year and next year. The EU will likely see inflation of 1.7 percent and 1.6 percent, respectively, for this year and next year.