The Frankfurt-based European Central Bank announced that it would slightly raise its 2014 growth forecast for the eurozone albeit it is to reduce its forecast for the development of inflation rate. ECB President Mario Draghi said that the central bank predicts the growth rate of 1.2 percent in 2014, then 1.5 percent in 2015, and 1.8 percent in 2016. This represents an upward revision of 0.1 percentage points for 2014 as compared to the ECB’s December 2013 forecast. As to the inflation, it is now expected to average at about 1 percent throughout 2014, 1.3 percent in 2015, and 1.5 percent in 2016. Inflation was revisited by a slight cut compared to the latest estimates. Real gross domestic product (GDP) growth is expected to stay temperate in 2014 and speed up from 2015.
Mario Draghi commented that a gradual recovery in both domestic and external demand is anticipated to be the leading force of the projected rise in activity. External demand should gain from the global economic recovery, which is moderately gaining power. Domestic demand, in contrast, would benefit mainly from enhanced confidence, flexible monetary policy attitude, and declining oil prices which is likely to shift disposable incomes. The ECB added that domestic demand should moreover benefit from improving credit supply conditions as well as less obstructive fiscal policy.
The new predictions came after the ECB had released its data on GDP growth in the last quarter of 2013. In the last months of 2013, GDP rose by 0.3 percent in euro area and by 0.4 percent in EU28 compared with the previous quarter. Compared with the same quarter of the previous year (2012), seasonally adjusted GDP rose by 0.5 percent in the eurozone and by 1.1 percent throughout the EU.
