Europe Forecasts Stronger Growth; Boost for US Exports Seen

European officials on Monday forecast stronger economic growth for the region, a major market for exports from California and the rest of the United States.

The economy of the 28-nation European Union will expand 1.6% this year after just 0.1% growth in 2013, according to the spring forecast by the region’s executive body. Growth will increase to 2% next year, the European Commission said.

“The recovery has now taken hold,” said Siim Kallas, the commission’s vice president.

“Deficits have declined, investment is rebounding and, importantly, the employment situation has started improving,” he said.

The region’s unemployment rate remains high at 10.5% as of March, according to Eurostat, the EU’s statistical agency. But that was down from 10.9% a year earlier.

The spring forecast projects the rate to remain stable at 10.5% this year and then fall to 10.1% in 2015.

In contrast, the U.S. unemployment rate dropped to 6.3% in April, its lowest level in more than 5 1/2 years.

In addition, the European Commission forecasts the U.S. economy to expand 2.8% this year and 3.2% in 2015.

As the numbers indicate, the European Union has had much more difficulty recovering from the Great Recession.

Debt crises and uneven attempts at austerity have hobbled the region’s economy, which fell back into recession in 2012-13. Monday’s report said the biggest risk to growth was a loss of confidence because of stalled economic reforms.

Europe’s economic troubles have hurt the U.S. economy, because the double-dip recession reduced demand for American exports. A pickup in growth in the EU should lead to an increase in U.S. exports.

This article appeared in print in the May 6th, 2014 edition of Hamodia.