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Growth in GDP figures in Europe and worldwide

The growth forecast for the EU has been revised in the European Commission’s interim autumn forecast due to a stronger GDP growth in the second quarter. Real GDP is expected to be 1.8 percent in the EU and 1.7 percent in the eurozone, which is a significant revision of previous growth estimates of 0.75 percent published in the spring forecast. The aggregate picture is based on updated projections for France, Germany, Italy, the Netherlands, Poland, Spain and the United Kingdom, which equal 80 percent of EU GDP. Global GDP (excluding the EU) is forecasted to grow by 5 percent this year, which is 0.25 percent higher than the spring forecast.

The recovery is broadening out across sectors and demand components, leading to a rebalance. This is due to the fact that the contribution of private investment and consumption to the growth in GDP in the second quarter of 2010 exceeded the combined contributions of inventories and net exports.

Inflation and consumer prices index

While the European Commission has revised its figures for GDP growth, the rate of inflation is set to remain unchanged for 2010, estimated at 1.4 in the eurozone and 1.8 percent in the EU.

There was a moderate rise in inflation in the first half of the year according to the Harmonised Index of Consumer Prices (HICP), as a result of a rise in prices of global commodities. Several factors ensure that inflation will remain in check: subdued wage growth, the remaining slack of the economy and low inflation expectations, in addition to the developments taking place in relation to exchange rates. HICP is forecasted to be 1.8 percent in the EU and 1.4 in the euro area.

OECD forecasts

However, the OECD’s composite leading indicator survey has predicted slower paced economic growth for several EU countries compared to the previous month’s assessment. The data suggests that France, the United Kingdom and Italy, three of Europe’s largest economies will experience slower levels of growth while the expansion phase of Germany is expected to peak.