European Commission: Spring Economic Forecast
Overview:
The European Commission has released its Spring 2011 Economic Forecast. It sees only a small upward revision to the growth outlook relative to the Autumn Forecast (although much stronger than expected Q1 GDP data may lead to a subsequent upgrade). Risks to the outlook remain high due to an uncertain external environment. The private sector, though, is increasingly robust and therefore likely to offset the impact of fiscal tightening. Unsurprisingly the forecast for inflation is upgraded significantly this year but there is little change to the 2012 numbers. Fiscal consolidation is making solid progress but public debt to GDP numbers will continue to deteriorate this year and next before they turnaround further out due to lower deficits and stronger growth. The unemployment rate will fall but only slowly.