European Union Economic Forecast
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The European Union is an economic and political union made up of 27 member states which are mainly from Europe. The European Union was formed upon the inauguration of the Maastricht Treaty in 1993, with the aim of fortifying Europe’s trade, economic and political power, with the removal of trade barriers and adoption of a common currency, the euro.
The European Union is an economic and political union made up of 27 member states which are mainly from Europe. The European Union was formed upon the inauguration of the Maastricht Treaty in 1993, with the aim of fortifying Europe’s trade, economic and political power, with the removal of trade barriers and adoption of a common currency, the euro.
During the financial crisis in 2008, a number of economies in European Union were heavily affected and required financial support. Major European Union economies such as Germany, United Kingdom, Italy and France experienced negative GDP growth in end of 2009, with the whole European Union recording a negative 4.2 percent GDP growth rate.
In 2010, major European Union economies did pick up and posted positive GDP growth rates again after 2009, but weaker European Union economies faced fears of sovereign debt crisis, notably Greece, Ireland, Portugal. In May 2010, members in the European Union, along with IMF pledge a total sum of 110 billion euro loan to bailout Greece. This is also followed by 85 billion euro rescue package for Ireland and 78 billion euro bailout for Portugal.
In mid 2011, Greece heads towards a default on its loan payments and calls for a second bailout just over a year. While members of the EU come together for the rescue of Greece, there are heated discussions on whether Greece should remain in the EU and continue adopting the euro.
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European Union GDP Forecast
The GDP (PPP) for European Union economies in 2010 was US$15.17 trillion. This was 2.71 percent increase compared to 2009 and gave the European Union economies a 20.4 percent share of the world’s total GDP (PPP).
From 2011, the European Union economies are expected to experience slow but steady overall growth amidst the european sovereign debt crisis. GDP (PPP) will grow between 3.4 to 3.9 percent from 2012 to 2016. By 2016, GDP (PPP) will reach US$18.72 trillion. This slow growth over the next 5 years will reduce European Union economies market share in the world to 17.7 percent in 2016.
The GDP (PPP) per capita is also expected to see a rising trend for European Union economies over the next 5 years. In 2010, GDP (PPP) per capita is US$30,388. GDP (PPP) per capita will grow between 3.25 to 3.77 percent from 2012 to 2016. By end of 2016, GDP (PPP) per capita will reach US$37,026.
European Union Unemployment Forecast
In 2010, the average unemployment rate in the European Union is 9.5 percent. The highest unemployment rate among the European Union economies is Spain, which has 20.65 percent of its labour force being unemployed. Germany has one of the lowest unemployment rate among the European Union economies at 6.85 percent, due to strong exports that boost its economy.
Unemployment rate is expected to fall years between 2.8 to 3.5 precent from 2012 to 2016. Spain’s unemployment rate is expected to fall to 14.84 percent in 2016. This figure is seen as a big fall from the highs of 20.06 percent in 2010. Austria will have the lowest unemployment rate in the European Union by 2016, at a rate of just 4.1 percent.
European Union Inflation & Current Account Balance Forecast
In 2010, inflation rate in European Union is 2.02 percent, and this rate is lower than the world’s average of 4.73 percent, when most economies in the world are still recovering from the 2008 financial crisis. This is an increase of 114.5 percent from its figure in 2009.
The European Union’s inflation rate is expected to rise by 34.82 percent in 2011, to reach a rate of 2.72 percent. The inflation rate will fall to below 2 percent in 2012 to hit 1.914 percent. From 2013 to 2016, the inflation rate is expected to fluctuate between 1.91 and 2 percent.
In 2010, the European Union posted an overall current account deficit of US$22.308 billion. Although the current account balance is in the negative zone, it has recorded significant growth since the 2008 financial crisis, when it hit a record current account deficit of US$167.4 billion. The 2010 figure also sees a 43.66 percent improvement in trade deficit from 2009.
Much of the reduction of European Union trade deficit is aided by Germany’s strong exports in 2010. Amidst a weakened euro, European Union economies see strong boost in their exports, with Germany being the largest EU exporter, and many major European Union economies posting trade surpluses.
From 2012 to 2015, the current account balance for European Union is expected to fall between 4.5 to 60 percent to a current account deficit of US$11.79 billion. In 2016, the deficit will rise by 9.7 percent to US$13.06 billion.
