The 19-member eurozone is expected to grow at its fastest pace in a decade this year, with gross domestic product growth beating forecasts and projected to reach 2.2%, well outpacing the United Kingdom, according to a European Commission report released on Thursday.
The bloc's Autumn European Economic Forecast said the countries using the euro currency, the eurozone, is on track to annual GDP growth of 2.2 percent - higher than the 1.7 percent announced in the spring.
Macron is now pushing through significant labor reforms in France and hopes around those reforms, combined with his repeated calls for enhanced European economic cooperation and consolidation, have helped push growth expectations for France for 2017 up to 1.6 percent from the earlier 1.4 percent.
"Real GDP growth is expected at 4.2 percent in 2017 and 3.8 percent in 2018, before decelerating to 3.4 percent in 2018, with a growing positive demand gap, driven by domestic demand".
Forecasts produced by economists in Brussels said the United Kingdom economy would grow by 1.5% this year rather than the 1.8% pencilled in when the last assessment was made in May. Economic growth and job creation are robust, investment is picking up and government deficit and debt are gradually decreasing. For 2018, the forecast was increased by 0.6 percentage points to 3.8 percent.
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The EU predicted these reforms would benefit the economy, with French growth to hit 1.6 percent this year, up from the earlier 1.4 percent. Monthly government statistics to date suggest that the 2017 general government primary balance target (1.75 pct of GDP in terms of the ESM programme definition) will be met, with the balance of risks tilted to the upside.
"The European economy has performed significantly better than expected this year, propelled by resilient private consumption, stronger growth around the world, and falling unemployment", the Commission said in a statement. The Commissioner added that the recovery in the eurozone is low by historical standards and was "atypical given its dependence on policy support, the continuing presence of fiscal and financial fragilities stemming from the crisis and the relatively subdued domestic demand compared to past recoveries". "Growth should remain strong and broad-based this year". The euro zone, meanwhile, is expected to grow by 1.7 per cent this year, an increase of 0.1 percentage points compared to the previous estimate.
The Commission expects an export recovery in the second half of this year, after somewhat weaker results in the second quarter, thanks to high external demand and further integration into European Union markets. Unemployment in the euro area is expected to average 9.1% this year, its lowest level since 2009, as the total number of people employed climbs to a record high.
The unemployment rate in Croatia will this year be 11.1 percent, falling to 9.2 in 2018, and 7.5 percent in 2019, which should be somewhere near European Union average. High households' indebtedness and increasing debt burdens, could also affect consumption growth.