Over 570 days since Russia's unprovoked invasion of Ukraine, the EU's macroeconomic situation has been slightly revised downward compared to the perspectives from summer 2023, with the EU economy shrinking in the first half of 2023 and a stricter monetary policy to combat inflation, according to the latest data from DGAgri.

Weaker growth is expected to extend into 2024. According to the latest forecasts from the ECB, annual real GDP growth is expected to be 0.7% in 2023 (-0.2 pp) and 1% in 2024 (-0.5 pp), dampened by the ECB's tighter monetary policy, unfavorable credit supply conditions, and gradual withdrawal of fiscal support.

Euro area inflation, which was 5.6% in 2023, with food inflation accounting for nearly 40% of consumer price increases.

BCE expectations for food prices indicate a downward trend in 2024 and 2025, although dynamic labor cost developments and increasing pressures due to unfavorable weather effects could still fuel food inflation. (Photo: Freepik)