Eurozone growing at quickest pace in 10 years, European Union forecast says

The Brandenburg Gate reflected by a puddle on Pariser Platz Square in Berlin Germany Tuesday Nov. 7 2017

The European Commission (EC) has raised its projections for GDP growth in Hungary to 3.7% for this year and 3.6% in 2018 in a forecast released Thursday, Hungarian news agency MTI reported.

In the Autumn Forecast, released Thursday, the European Union said the currency bloc will grow 2.2 percent this year instead of prior projection of 1.7 percent. This is substantially higher than that expected in the spring forecast for 2017 (1.7 pct).

Despite this growth, the Commission states in its report that the Croatian GDP would return to the level before the crisis in two years.

Real GDP in Greece rose by 0.5 pct (q-o-q) in both the first and second quarters of this year (in seasonally-adjusted terms), corresponding to a rise of 0.6 pct (y-o-y) for the first half of 2017.

"Economic growth in the United Kingdom has been slowing since the start of the year, as higher consumer prices constrained private consumption growth", the commission report said.

The European Commission forecasts that the Croatian economy will grow this year more than previously expected, but there are still risks associated with the restructuring of Agrokor.

The government 2017 balance is expected to remain in surplus at 0.9% of GDP.

"While market reactions to recent events in Catalonia have remained contained, the risk exists that future developments could have an impact on economic growth", the Commission noted in its reports, adding that the size of the impact "cannot be anticipated at this stage".

"The government's fiscal stimulus this year - supported by stronger exports, a significantly depreciated Turkish lira in comparison with last year and a strong boost from public finances and other policy incentives, meant to restore confidence in the Turkish economy", the bloc's economic report said.

Moscovici, the French member of the Commission, said the decision over closing the procedure will be taken in spring 2018.

"Consumption growth is projected to be modest, in line with weak real wage growth, while uncertainty continues to weigh on business investment".

Pierre Moscovici, the European Union commissioner for economic and financial affairs, said: "We have entered a new phase of the economic recovery, with stronger growth driven by resilient consumption, the global upswing, loose financing conditions and falling unemployment".

Domestic demand remains the primary driver of growth.

The EC warned that Hungary's labor market is becoming "increasingly tight" and said price pressures are expected to grow over the forecast horizon.

However, overall current revenue growth is predicted to slow down next year, due to expected lower income from the citizenship scheme.

The EC projects the general government deficit will rise to 2.1% of GDP this year and 2.6% in 2018, before falling to 2.3% in 2019. High households' indebtedness and increasing debt burdens, could also affect consumption growth.

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