BRUSSELS - The European Commission on Wednesday projected that inflation in the euro area will continue declining to 2.5 percent in 2024, downwardly revised from 2.7 percent.

In the latest Spring economic forecast, released Wednesday, the commission said the single currency bloc will grow 0.8 percent this year, despite global uncertainty.

“Our forecast remains subject to high uncertainty and – with two wars continuing to rage not far from home – downside risks have increased,” said EU Commissioner for Economy Paolo Gentiloni.

The Spring Forecast is based on a sharper-than-expected slowdown in consumer prices, which reflected in the good figures recorded at the beginning of the year.

These rates are closer to the 2 percent European Central Bank target for 2024.

In this context, the European Commission said inflation is set to fall further and reach the ECB target next year.

Brussels expects a 2.1 percent increase in prices in the eurozone next year, compared to 2.2 percent so far.

It said disinflation is set to be mainly driven by non-energy goods and food, while energy inflation edges up and services inflation declines only gradually, alongside moderation in wage pressures. Inflation in the EU as a whole is expected to follow a similar path, though remaining slightly higher.

Brussels expects EU inflation to fall to 2.7 percent in 2024 and 2.2 percent in 2025.

At the growth level, the difficult phase has ended after the EU economic activity broadly stagnated in 2023. Private consumption only grew by 0.4%.

The Commission affirmed an expected recovery this year that sterns from a better-than-expected performance in the first quarter.

On Wednesday, Eurostat said the eurozone economy grew by 0.3% in the first quarter of the year, suggesting a slow recovery is now underway after six straight quarters of stagnant or negative growth.

“The EU economy perked up markedly in the first quarter, indicating that we have turned a corner after a very challenging 2023,” Paolo Gentiloni said.

He expected a gradual acceleration in growth over the course of this year and next, as private consumption is supported by declining inflation, recovering purchasing power and continued employment growth.

In this regard, Brussels projects GDP growth in 2024 at 0.8 percent in the euro area and in 2025 at 1.4 percent.

Also, economic momentum is expected to gather pace over the coming quarters, leading to an annual growth rate for the EU of 1 percent this year and 1.6 percent in 2025.

Employment meanwhile grew by 0.3 percent in the first quarter, confirming anecdotal evidence that the labor market continued to tighten as firms were hoarding labor in anticipation of a rebound in growth.

While the European Central Bank raised interest rates to a record high in recent years to sharply slow growth and inflation, firms held on to workers, unlike in most other recessionary episodes.

Euro Zone Less Dependent on Fed

The size of the euro zone’s domestic market make the pace of future ECB interest rate cuts less dependent on US moves, ECB policymaker Francois Villeroy de Galhau said on Wednesday, pushing back on warnings that it should not get too far ahead of the Fed.

The ECB has flagged a first rate cut at its June meeting and Villeroy reiterated that the pace after that would be decided meeting-by-meeting depending on the flow of economic data and forecasts.

Belgian central bank chief Pierre Wunsch said on Tuesday that a delay in rate cuts by the US Federal Reserve could slow the pace of ECB rate cuts.

Villeroy, who is also the French central bank governor, said that variations in the euro dollar exchange rate accounted for less than 10% of euro zone inflation.